The state of Illinois is caught between a rock and a hard place. The state is in desperate need of revenue and is looking to sports betting to solve that problem. However, it may not be easy for the state.
DraftKings and FanDuel are allies in what is a battle between them and the state of Illinois. The state is entertaining the idea of a “bad actor” provision. It would keep DraftKings and FanDuel out of Illinois for three years after sports betting is legalized.
The proposal comes with House Bill 1260 and has some support from Rush Street Gaming owner Neil Bluhm. Bluhm is advocating the provision to keep FanDuel and DraftKings out of Illinois for those three years. This would give Bluhm’s Rush Street Interactive a leg up on the competition that is FanDuel and DraftKings.
FanDuel and DraftKings aren’t taking this provision lightly. They have already hired attorneys to look into the situation. They have threatened further legal action if the provision passes. Those attorneys believe that the potential amendment is aimed to specifically keep the two sportsbook providers out of Illinois.
“As the amendment’s proponents have made abundantly clear in their committee testimony, the purpose of the amendment is not to seriously assess the suitability of potential operators, but instead to exclude two specific competitors who are leading the market in other states.”
In 2015 former attorney general for the state of Illinois Lisa Madigan said that FanDuel and DraftKings operated in the state illegally. Thus making them fall under the “bad actor” clause. The two filed suit asking the courts to declare that they weren’t operating illegally. Years after the suit, the state and daily fantasy sports operators settled without a ruling. The two companies were able to sue again if any authority used the opinion to prosecute them for illegal gambling.
That is where we are now. The lawyers on the side of DraftKings and FanDuel believe that the “bad actor” clause would be illegal for several reasons. Those attorneys pointed out several instances that would cause the “bad actor” provision to be illegal.
* The Illinois state constitution’s Special Legislation Clause. This prohibits state lawmakers from writing a law specifically designed to benefit one group.
* The Constitution’s Equal Protection Clauses.
“The proposed amendment specifically and narrowly excludes two identifiable entities – FanDuel and DraftKings – from a right it grants to a larger class, purportedly based on the fact that they were the subject of the Advisory Opinion declaring their past conduct to be illegal,” the attorneys wrote.
“There is ample evidence that the true purpose of the statute is to protect local competitors, including Illinois casinos, against competition from FanDuel and DraftKings in the sports wagering market.”
* Constitutional protections against punishment for criminal activity without a trial.
“The proposed amendment categorically excludes FanDuel and DraftKings from the market based on an extra-judicial finding of guilt of the crime of gambling,” they wrote.
* The Constitution’s Due Process Clauses.
“There is a strong argument that proposed amendment turns the constitutional requirement of due process on its head by requiring FanDuel and DraftKings to prove their innocence of criminal allegations if they wish to be licensed in Illinois,” the attorneys wrote.
The Chicago Tribune reported that FanDuel and DraftKings have removed a 30-second TV ad off the air. The two companies planned a $1 million ad campaign targeting Bluhm. Per the governor’s request, the ad was taken down. Although the ad never mentioned Bluhm directly, it was clear that is who the sites were targeting.
The TV ad contained the following:
“Illinois is in debt, but there’s hope in a significant amount of tax revenue with online sports betting. In order to benefit from this, we must allow those who are experienced in the digital gaming arena to compete in our state. But there is a casino owned by a billionaire that wants to keep them out, which will compromise tax revenue for Illinois.”
Illinois has about a week to decide if they want to legalize sports betting and what provisions to bring with it. Regardless of their decision, it looks like the state of Illinois is going to receive trouble from some side of the argument.