Category Archives: Lottery

Fourth Quarter Politics in Illinois

Illinois is proving a good example of what many of the 50 states may eventually experience. The problem is that internet gambling issues do not exist in isolation but coexist with brick-and-mortar gambling issues… and a myriad of other issues besides.

The Illinois legislature has four days until its target adjournment date, but there remains an unresolved budget crisis. The State risks suffering a lowered credit rating if legislators cannot fix failing programs for public employee pensions and Medicaid obligations.

Throughout the current legislative session, legislators and lobbyists for the gaming and horse racing industries have conferred with the governor’s office over the prospect of gambling expansion. Language related to internet gambling has never been part of the brick-and-mortar bill, but internet gambling has surely been part of the discussion.

As for the brick-and-mortar gambling bill, I pass no judgment but refer to various opinion articles published in the State Journal-Register of Springfield, Illinois.

The SJ-R itself takes an official position against brick-and-mortar expansion:

We, too, have opposed this bill (SB 1849), mostly because it purports to turn the law of supply-and-demand on its head. Casinos in Illinois have been struggling since the recession hit. Demand has fallen drastically. This bill claims that opening five more casinos, plus turning horse racing tracks into casinos, suddenly will create 20,000 new jobs and bring in $200 million to state coffers annually. We’re just not buying that all that wealth is not now reaching the state because people can’t find enough casinos. (Our Opinion: More gambling a bad bet (SJ-R)).

But see also: Point: Gambling expansion bill is based on ‘supply and demand’ by Rep. Lou Lang, D-Skokie, deputy House majority leader. And also: Counterpoint: Gambling expansion bill is a continuation of failed policies by Anita Bedell, executive director, Illinois Church Action on Alcohol and Addiction Problems, Springfield.

On May 15, Senator John Cullerton, President of the Senate, offered a separate bill that would legalize internet gambling. This bill, HB 4148, proposed to give broad market and decision-making control to the Illinois Lottery. The bill explained that the Lottery would manage an “internet gaming platform,” but it lacked clear language indicating whether casinos or horse racing companies could participate. They could not have been happy about it.

But then on May 23 the brick-and-mortar gambling expansion bill was approved by the House. And then two days later on May 25, Senator Cullerton revised the internet gambling bill to clearly specify that Illinois casinos and horse racing operators can become licensed to participate in the Lottery’s gaming platform. The revised bill just might make enough people happy.

Nonetheless, there is disappointingly sparse amount of mainstream media attention being given to the internet gambling legislation. The brick-and-mortar bill continues to generate controversy and opinion, but the importance of internet gambling to the discussion is not talked about.

Governor Quinn is silent about internet gaming, but he does continue to publicly oppose the brick-and-mortar expansion. A veto threat could be a somewhat viable negotiating chip on some issue or another. See: Quinn says he can’t support gambling expansion bill (SJ-R) See: Quinn dismisses gambling as ‘shiny’ distraction (SJ-R)

Four days remain, and a lot can happen in four days. See: Statehouse nearing the finish line (SJ-R) And: What’s Been Done? What’s Yet to Come? (Illinois Issues Blog)

Author Bradley Vallerius is an Illinois attorney specializing in gaming and video gaming licensing and compliance.

Revisions to Illinois internet gaming bill: Lottery barred as operator but retains regulatory authority

Ten days after offering his first plan to legalize internet gambling in Illinois, Senator John Cullerton has revised his plan so that it envisions a substantially different sort of regulatory system. The older plan would have given the Illinois Lottery a near monopoly over the internet gambling market. Now, under the new bill, the Lottery would not compete at all.

Formerly, Illinois House Bill 4148 called for the Lottery to serve as both an operator and a regulator of an “internet gaming platform.” The revised bill no longer envisions that the Lottery would directly offer internet gambling opportunities to the public. But the Lottery would still be the regulatory agency for internet gambling, and it would still fulfill its duties by managing an internet gaming “platform.”

Eligible entities

A newly created Division of Internet Gaming within the Lottery Department would license operators, called “internet gaming affiliates,” to participate in the platform.

Three classes of entities would be eligible to apply for licenses to become an affiliate of the Lottery’s internet gaming platform:

(i) Any person who holds a valid and unrevoked owners license issued pursuant to the Riverboat Gambling Act;

(ii) Any person who holds a valid and unrevoked organization license issued pursuant to the Illinois Horse Racing Act of 1975; and

(iii) Any person who holds a valid and unrevoked advance deposit wagering license issued pursuant to the Illinois Horse Racing Act of 1975.

Applicants would be required to pay a $5 million fee along with their application for licensure.

Language comparisons

A summary look at the definitions found in the old and new bills demonstrates how significantly different the new version is. The old version envisioned a Lottery that directly offers internet wagering opportunities, whereas the new version envisions a Lottery that oversees a program in which licensed affiliates offer internet wagering opportunities.

  • Old version of definition of internet gaming platform:

“Internet gaming platform” means an interactive set of related data networks that may be accessed by authorized participants for the purpose of wagering on internet games.

  • New version of definition for internet gaming platform:

“Internet gaming platform” means an interactive set of related data networks that may be accessed by licensed internat gaming affiliates for the purpose of offering wagering on Internet games to authorized participants.

  • Old version of definition of internet wagering:

“Internet wagering” means the placing of wagers with the Division using the Division’s internet gaming platform  through which the Division may offer Internet games to persons who have established an Internet wagering account…

  • New version of definition of internet wagering:

“Internet wagering” means the placing of wagers using the Division’s internet gaming platform through which licensed Internet gaming affiliates may offer internet games to persons who have established an Internet wagering account…

  • The old version of HB 4148 did not conceptualize licensed internet gaming affiliates, but the new version supplies the following definition:

“Licensed internet gaming affiliate” means an individual who is licensed by the Division to offer wagering on Internet games to authorized participants using the Division’s Internet gaming platform.

  •  Finally, compare the duties of the Division of Internet Gaming under the old plan:

The Division of Internet Gaming is established within the Department of the Lottery, and is authorized to offer Internet wagering on Internet games on the Division’s Internet gaming platform…

  • Duties of the Division of Internet gaming under the new plan:

The Division of Internet Gaming is established with the Department of the Lottery, and is authorized to establish an Internet gaming platform that may be accessed by licensed Internet gaming affiliates in order to offer wagering on Internet games….

Context

The legislature has only one week left to approve the bill. Just last week the legislature enacted a bill related to brick-and-mortar gaming. Having those issues out of the way could make negotiating votes for the internet gambling bill easier. Or it could make the prospects of approving an internet gambling bill unlikely. One week will tell.

Click here for the new version of HB 4148 (filed May 25, 2012).

Illinois HB 4148 would give the State Lottery a monopoly on internet gaming

A plan to legalize internet gambling in Illinois has suddenly appeared in the State Senate. If enacted, newly amended House Bill 4148 would establish the Illinois Lottery as a monopoly operator of internet gambling and poker within the state.

The Plan

Illinois HB 4148 would authorize the Department of the Lottery to create a Division of Internet Gaming. The new Division would receive broad discretion to decide the rules for internet gambling in Illinois.

 For example, the Division of Internet Gaming would adopt regulations related to:

  • types of games that can be offered,
  • payout percentages,
  • acceptable forms of payment,
  • responsible gaming controls,
  • technology platforms, and
  • such other matters that are necessary or desirable.

The Division of Internet Gaming is the only entity that would be authorized to operate internet gambling in Illinois.

Political Concerns

The President of the Senate, Senator John Cullerton, is the legislator responsible for the plan’s sudden appearance on the legislative record. Senator Cullerton has been focused on gaming and economic expansion in general throughout the entire 2011-2012 legislative session. He is also keenly aware that time is of the essence. Illinois is facing an awful budget crisis, but there are few other bills that could generate new sources of income this session. Previously, HB 4148 had covered unrelated subject matter, but Senator Cullerton’s amendments transformed the bill entirely.

The bill faces overwhelming obstacles. Both chambers must approve it before May 31, which is the target adjournment date for the legislature. Furthermore, political opposition from licensed Illinois casino operators is guaranteed because the plan would prohibit them from competing against the Illinois Lottery.

Click here to view the latest version of HB 4148.

Article edited May 17, 2012. A prior version indicated that HB 4148 was ready for voting on the floor of both chambers, but actually it must first be heard before the Senate’s Executive Committee.

About the Author: Bradley Vallerius is a licensed attorney in the State of Illinois who is focused on gaming and technology issues. His office provides free consultations for questions about remote gambling possibilities in the United States. +1-(480)-382-5537.

How some states are going separate ways

Quadjacks Poker Radio recently conducted a one-hour discussion panel to discuss some of the ways different states will exercise their power to make and enforce their own laws for gambling on the internet.

The panel discusses recent developments in Utah, Illinois, California, and Nevada.

Panelists include Steve Brubaker, a gambling lobbyist in Illinois; Drew Lesofski, director of grassroots and external affairs for the Poker Players Alliance; and Bradley Vallerius, owner of ForTheBettorGood.com.

The audio is available for streaming or downloading at Quadjacks.com.

Illinois Lottery pilot program is not truly internet gambling

The Illinois Lottery’s internet pilot program takes off this weekend, giving residents of the state the opportunity to use the internet to purchase tickets to its traditional weekly prize drawings.

The pilot program has been a long time in the making. The legislature first approved the program in 2009, but only on the condition that the U.S. Justice Department first approve the plan as compatible with federal law. Approval finally came in September of 2011 in the form of a shocking Memorandum Opinion that fundamentally altered the Justice Department’s traditional view of federal law by declaring that interstate sports wagering is the only type of internet gambling that is prohibited by federal law.

The pilot program is a monumentally progressive step for American internet gambling policy, but it is only a very small step. The pilot program does not actually authorize internet-based games, but rather  permits customers only to use the internet to purchase the same old tangible real-world products. Essentially, the pilot program merely creates a new convenient retail point for the consumer.

According to the legislature’s enabling act:

(1)   The consumer market in Illinois has changed since the creation of the Illinois State Lottery in 1974;

(2)   The Internet has become an integral part of everyday life for a significant number of Illinois residents not only in regards to their professional life, but also in regards to personal business and communication; and

(3)   The current practices of selling lottery tickets does not appeal to the new form of market participants who prefer to make purchases on the internet at their own convenience.

It is the intent of the General Assembly to create an Internet pilot program for the sale of lottery tickets to capture this new form of market participant. (20 ILCS 1605/7.12).

Initially, customers can purchase only tickets for Lotto drawings and Mega Millions drawings, but it appears probable that the legislature will soon approve the sale of tickets for Powerball drawings as well (see S.B. 3497).

Presently there is no legislation pending in Illinois that would permit actual internet wagering such as poker, casino games, slot machines, or even instant scratch tickets.

Illinois residents can create accounts and begin playing on the Illinois Lottery website.