- Illinois Gaming Board approves filing co-branding rule as proposed permanent rule
- IGB administrator says co-branding rule is “lawful, faithful to text of Sports Wagering Act”
- Move benefits PointsBet in short-term, most national sports betting operators in long-term
Despite the objections of the state’s most influential gaming company, Illinois regulators doubled down Thursday on a rule that would permit co-branding for sports wagering platforms.
After initially proposing it as an emergency rule in May, the Illinois Gaming Board (IGB) voted unanimously to submit a rule that would allow operators to co-brand mobile wagering applications as a proposed permanent rule.
The rule permits multiple brands to be displayed on a sports betting platform, requiring that the “parent brand” of the licensee, whether it be casino, racetrack or sports facility, be “prominently displayed.”
In practice, it would potentially provide a path for operators to use their recognizable sports betting brands in the state, rather than being forced to use the lesser known brand of its local casino or racetrack partner.
“We believe this rule adopts a measured and moderate approach to online branding for Illinois sportsbooks that is lawful, faithful to the text of the Sports Wagering Act, and provides clarity and transparency for licensees, operators, the public, and gaming board staff,” said IGB administrator Marcus Fruchter.
“It avoids potential litigation risk and allows customers to receive information about the entities with whom they’re placing their bets.”
The rule will be submitted to the Secretary of State and to the Joint Committee on Administrative Rules (JCAR) for approval.
Had the rule been filed as an emergency rule, it would have become effective immediately upon filing, but would have only been in effect for 150 days.
In comments on the proposed rule last month, an attorney for Rivers Casino called for the rule to be withdrawn entirely, arguing that the legislature intended to impose far stricter branding restrictions than the IGB proposes.
“Whatever the board’s opinion of the explicit branding requirements may be, it lacks the authority to end-run the legislative process and to adopt rules, emergency or otherwise, that contravene the act’s language and are contrary to the documented legislative history and the General Assembly’s stated purpose for adopting the branding restrictions,” wrote attorney Paul Gaynor in a June letter to the board.
“If desired, the General Assembly could have adopted a co-branding model or given discretion to the board to have flexibility to decide how tracks and casinos may brand internet and mobile sports wagering, but instead, it purposefully chose not to,” he wrote.
The move comes just days after a significant win for Rivers, with Governor J.B. Pritzker allowing an executive order permitting remote registration for sports betting accounts to expire before any company other than Rivers could launch its sports betting platform.
Since Monday, customers have had to register in-person at a licensed facility, as required by the Sports Wagering Act approved last year.
The branding restrictions in the law, combined with the in-person registration requirement, comprised the so-called “penalty box” that was designed to give the Illinois-based Rush Street Gaming an advantage by locking out deep-pocketed competitors such as FanDuel and DraftKings.
In the short term, the most immediate beneficiary of the rule going into effect would likely be PointsBet. The company’s partner, Hawthorne Race Course, is the closest licensed facility to downtown Chicago. In addition, the course has three off-track betting locations in the Chicago area where players could register.
Hawthorne’s master sports betting license application was approved by the board Thursday as well, and PointsBet CEO Sam Swanell said on an earnings call earlier this week that the company plans to launch by the end of August.
Swanell also said the company would use its PointsBet brand in the state and talked about the importance of doing so.
“The state of Illinois recognizes that national players, such as us, we’re going to be doing national marketing, and that will be under our national brand,” he said. “And so, if they want to get the benefit of that in the state of Illinois, we have to be able to use our brand, and that’s what that rule represents.”
DraftKings went a step further to shore up its standing in the state, reaching a deal last week to rebrand the East St. Louis-based Casino Queen property as “DraftKings at Casino Queen,” although the move came prior to Pritzker allowing his executive order to expire.
The in-person registration requirement is expected to be in place for the next 17 months barring further intervention from either Pritzker or an amendment to the law approved by the state legislature, limiting the immediate benefit of being able to use a more recognizable brand, as bettors would still have to travel to the partner casino to register.
In the long-term, however, when remote registration is permitted, the rule could benefit most of the operators with an interest in entering the Illinois sports betting market, include Penn National Gaming, which could use its Barstool Sports brand in some form, as well as William Hill, and Flutter Entertainment’s Fox Bet brand, which both have market access partnerships in the state.