Betway is the sole applicant and winner of an Illinois online-only sports betting license. During the July 27 Illinois Gaming Board (IGB) meeting, IGB Administrator Marcus Fruchter pointed out that identifying Betway as a winning bidder does not grant the operator a license.
The IGB added that there was another bidder, which withdrew its application in early July. As part of the licensing process, the governing body will conduct an investigation of the application. If it approves it and grants a license, Betway’s parent company Super Group will have to pay a $20 million licensing fee.
Illinois’ Sports Wagering Act allows up to three online-only licenses with an initial cost of $20 million. That’s double the maximum fee of $10 million for the regular license. That’s because the online-only license doesn’t require operators to partner with a land-based casino.
BetMGM Sportsbook almost acquired the first such license, announcing its launch in March 2022 when Illinois’ in-person registration requirement ended.
However, BetMGM now holds the same type of license as the state’s other sportsbooks do.
Could IGB Grant a License on the Second Try?
The high licensing fee has been one of the main reasons the three online-only licenses are still available. Betway’s application is part of a second bidding round. During the first round, IGB received four applications, but none got a license.
One bidder withdrew early, while one missed the deadline. The IGB rejected the third application by Fubo Sportsbook, which has ceased operations since then. The lone remaining applicant, a special purpose acquisition company, Tekkorp Digital Acquisition Corp., withdrew its application in October 2022.
While not confirmed, rumors suggested that Betway was the applicant that withdrew early in the first round. The company applied when the IGB opened the second round of bidding in November 2022.
The second bidding round saw only two applicants. A bid document shows the other applicant was Bet J&J. The company is owned by J&J Ventures, which operates over 2,600 video gaming terminals (VGTs) in Illinois.
An Online-Only License Means Betway Keeps Its Revenue
Betway’s $20 million license comes with one significant benefit: not sharing the revenue with a land-based partner. Long-term, that could be worth the licensing fee. Still, it’s a risky move by Betway; especially at a time when smaller operators are shutting down.
However, Illinois is one of the highest-performing states regarding sports betting. The state consistently ranks as the second-highest market in the country after New York. Through May 2023, sportsbooks’ lifetime revenue stands at over $1.9 billion.
Of that revenue, sportsbooks pay a 15% tax to the state and a share to their retail partners. Not paying that share to a retail casino could save Betway much more than the $10 million difference in licensing fees.
If it launches successfully and gains a market share even similar to smaller operators, Betway’s bet could pay off.
For instance, Caesars Sportsbook was the last entrant to the industry in August 2021. Since then, it has generated over $50 million in revenue. Barstool Sportsbook launched a few months prior, in March 2021, and its lifetime revenue is $78 million.
No Retail Partner Means No Possibility of a Future Online Casino
While the benefit of not sharing revenue is significant, the license could have a major drawback. If online casinos become a reality in Illinois, Betway won’t have a chance to operate one. That’s because it doesn’t have a retail casino partner.
However, Illinois hasn’t yet legalized online casino gambling.
Two bills were introduced this year, but both failed in March. However, Illinois is on many industry experts’ shortlists of becoming one of the states that could legalize iGaming. State Rep. Edgar Gonzalez Jr., a sponsor of one of the bills, told Bonus earlier this year that he plans to keep pushing to make online casinos a reality in Illinois.
Estimates by Bonus show that online casinos could bring in up to $240 million in tax revenue in the first mature year. That is based on the 15% tax that the seven sportsbooks currently pay. That implies annual revenue of $1.6 billion, much higher than sportsbooks.
Could Betway Go for a Sports-Only License in Michigan?
Betway’s interest in Illinois’ sports-only online license could impact Michigan. That’s because there may be one available license in the Great Lakes State. Flutter Entertainment, the co-owner of Fox Bet, announced the sportsbook stopped taking bets and will shut down by the end of August. The fate of Fox Bet isn’t surprising, given the results of the arbitration case between its co-owners, Flutter and Fox Sports.
Fox Bet became a reality after a deal between PokerStars and Fox Sports. But it did not make sense once Flutter bought PokerStars. Flutter already runs a sportsbook, FanDuel. While technically, PokerStars can use Fox Bet’s license, it will unlikely do that, as the company is focusing on iGaming.
That leaves the Little Traverse Bay Bands of Ottawa Indians without a sportsbook partner. PokerStars remains the tribe’s partner for iGaming, so as long as it operates, there’s no space for a full sports and iGaming license.
Meanwhile, online gambling analysts believed it would be difficult for states to gain operators willing to go after sports-only licenses. That’s because companies like Bally’s and Unibet have stated they want to focus on iGaming. But if Betway is willing to bet on Illinois, it might look at Michigan, as well. That’s if things in Illinois work out.
But some factors that could steer Betway away from Michigan are revenue and competition. Illinois sportsbooks have generated more than double the revenue of those in Michigan. Also, there are only seven sportsbooks in Illinois, while in Michigan, there are 14. (Plus the opening for the 15th.)