DraftKings has found a work-around to an Illinois state law designed to keep it from offering sports betting to residents for another 18 months.
The newly public company has a market-access deal with Casino Queen in East St. Louis, according to a recent SEC filing. The partnership, which is in the 5-10 year range, should allow DraftKings to skirt a specific part of Illinois gambling law, colloquially called a “penalty box,” which gave local brick-and-mortar casino owners a head start in establishing mobile sports betting products.
DraftKings will operate Casino Queen’s mobile and retail betting, in exchange for an undisclosed percent of net gaming revenue, according to the filing. Representatives for Casino Queen, which is employee owned, didn’t immediately respond to a request for comment.
DraftKings confirmed the deal in an emailed statement. “We look forward to working with both the Illinois Gaming Board and Casino Queen to bring our legal sports betting product to Illinois,” the company said.
The deal likely means early access for DraftKings into one of the country’s newest and largest sports betting markets. Illinois is the sixth largest state in the U.S. by population, with teams in all five major leagues. The state could eventually hit $1 billion in annual sports betting revenue, according to Eilers & Krejcik Gaming.
Market-access deals allow a gambling operator to gain the right to operate within a specific jurisdiction by partnering with an already licensed party In this case, Casino Queen was one of seven Illinois casinos recently given a master license by the Illinois Gaming Board.
Illinois, which went live in March, planned to eventually sell three online-only licenses to outsider operators at a steep price of $20 million. Had DraftKings chosen to go that route, the law allows the gaming board to wait 540 days – or 18 months – before assigning those licenses.
The system appeared designed specifically to exclude DraftKings and Fanduel. Both companies offered daily fantasy sports in the state for years – illegally, according to a 2015 ruling from the state’s attorney general – and that angered many lawmakers and casino operators who argued it would give the companies an unfair advantage wooing customers.
Last June DraftKings CEO Jason Robins took to Twitter to voice his displeasure. “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,” he said. “Very disappointing that Illinois customers will not have the best options available to them for 18 months.”
Earlier access would be a big step for DraftKings, which is already taking online bets in seven states. The company went public earlier this year via reverse merger and its stock price has soared, despite the lack of games. The stock opened Tuesday at $33.06, nearly double it initial listing back in April.