Getting around a state law

DraftKings has discovered a way to get around a state law in Illinois that is supposed to stop it from being able to launch a sportsbook for 18 months.

The daily fantasy and sports betting company has secured a multi-year market access agreement with Casino Queen in East St. Louis as per a SEC filing. As a result of this deal, DraftKings is expected to be able to bypass the 18-month waiting period that has been dubbed as a “penalty box”.

retail and online sportsbook operator in return for an unspecified cut of the net gaming revenue

A market access deal allows an operator to partner with a party that is already licensed to launch a sportsbook in a given state. With Casino Queen recently granted a master sports betting license by the Illinois Gaming Board, DraftKings looks set to be its retail and online sportsbook operator in return for an unspecified cut of the net gaming revenue.

A DraftKings statement confirmed the partnership, adding: “We look forward to working with both the Illinois Gaming Board and Casino Queen to bring our legal sports betting product to Illinois.” The employee-owned casino has not yet issued a public statement on the matter. 

An opportunity for DraftKings

The deal outlined in the SEC filing on June 16 is a significant opportunity for DraftKings, as it is set to enter one of the largest and newest online sports betting markets in the country.

annual sports betting revenue in Illinois could hit $1bn once the market matures

Illinois has the sixth-largest population in the nation, with teams representing it in all of the major sports leagues. According to an estimate from consulting firm Eilers & Krejcik Gaming, annual sports betting revenue in Illinois could hit $1bn once the market matures. 

The state’s plan was for three online-only sportsbook licenses to be issued to outside operators such as DraftKings once the 18-month waiting period was up. These licenses are set to cost $20m each.

Reasons for the penalty box

The penalty box period supposedly targeted FanDuel and DraftKings specifically, preventing them from entering the newly opened sports betting market in Illinois. The established waiting time was also intended to allow local gambling operators to get a head start with launching and getting customers for their online sportsbooks.

intended to allow local gambling operators to get a head start

Both brands in question had been running their daily fantasy sports offerings illegally in Illinois, according to a 2015 ruling by the state’s attorney general. Their operations drew angry reactions from numerous casino operators and lawmakers. 

When the penalty box period was announced, DraftKings CEO Jason Robins expressed his displeasure. He said: “While it is good to see sports betting bills passed, excluding DraftKings and FanDuel is like passing a ride sharing bill that excludes Uber and Lyft.”

DraftKings already has online sportsbooks in seven states and recently became a publicly traded company.