The Illinois Gaming Board announced on Thursday that it had resumed the application process for three online-only sports betting licenses after the only remaining original bidder dropped out.
Tekkorp Digital, a Las Vegas-based blank check company, has canceled plans to acquire Caliente Interactive, a Mexican gaming company with ties to a controversial Tijuana business owner, and earlier this month filed a motion to withdraw its application for its online sports license in Illinois placed . The application was approved by the Games Committee on October 17.
With no other applicants in the pipeline, the state will reopen the selection process on November 1 in hopes of finding qualified bidders willing to pay a $20 million royalty to get one of three pure bids Engage in online sports betting permitted by the Illinois Sports Wagering Act. Applicants have until March 1 to submit an offer.
The state has made its first attempt at landing an online-only sportsbook to enter Illinois’ competitive sportsbook market.
Four companies applied to the Illinois Gaming Board last year for the three online licenses, which are not tied to casinos, racetracks or sports venues.
Tipico, an international sportsbook based in Malta, missed the December 3 deadline and was rejected by the Gaming Board.
Digital Gaming, a Florida-based company, withdrew its application after filing.
Fubo Gaming, a division of New York-based streaming service FuboTV, was notified in April that “it did not meet minimum requirements and was disqualified,” according to the Gaming Authority. On Oct. 17, FuboTV announced that it would close its subsidiary, Fubo Gaming, and stop operating its online sportsbook in order to “meet longer-term profitability goals.”
That left Tekkorp/Caliente as the only remaining applicant, but his bid has faced increasingly lengthy opportunities in recent months.
In May, a Washington, DC-based nonprofit called Stop Predatory Gambling sent a letter to Gaming Board Administrator Marcus Fruchter expressing concern that Caliente Interactive is part of Grupo Caliente, a Mexican gaming company owned by Jorge Hank Rhon, former mayor of Tijuana. The group raised decades-old allegations that Rhon was involved in everything from drug trafficking to illegally transporting endangered wildlife.
While Tekkorp refuted claims that Caliente Interactive was owned by Grupo Caliente, the concerns proved unfounded. In a September proxy filing, Tekkorp said capital market conditions had deteriorated and it was exploring “alternative opportunities” with Caliente. The company sought an Oct. 13 shareholder vote to extend the merger deadline.
In a filing with the Securities and Exchange Commission Oct. 4, Tekkorp said it no longer seeks an extension of the merger and will begin finalizing the deal on Oct. 26.
Sportsbooks in Illinois generated $8.5 billion in wagering and $611 million in adjusted gross revenue — the money that’s withheld after winnings are paid out — in fiscal 2022, according to an annual betting report last month published by the state. That represents a 61% increase in revenue during the fiscal year ended June 30th. At a 15% tax rate, the state collected $92 million in tax revenue and an additional $50 million in royalties.
The state operates nine retail sportsbooks, seven of which offer online sportsbooks. In March, Illinois permanently waived in-person registration, allowing online platforms nationwide to compete for customers. Online betting accounted for 96% of sports betting revenue generated in Illinois in fiscal year 2022.
FanDuel, which is affiliated with Fairmount Park Racetrack near St. Louis, was the state’s top sportsbook with more than $253 million in adjusted gross revenue for the year, according to the report. DraftKings, which partners with Casino Queen in East St. Louis, was the state’s #2 sportsbook with nearly $148 million in adjusted gross revenue, followed by BetRivers in Des Plaines with about $99 million.
According to a September report by Eilers & Krejcik Gaming, a California-based research and consulting firm, Illinois ranks third among states that have legal sports betting.