The Illinois Gaming Board announced Thursday it has reopened the application process for three online-only sports betting licenses after the only remaining initial bidder dropped out.
Tekkorp Digital, a Las Vegas-based blank check company, called off plans to acquire Caliente Interactive, a Mexican gaming company with ties to a controversial Tijuana business owner, and submitted a request to withdraw its application for the Illinois online sports license earlier this month. The request was approved by the gaming board Oct. 17.
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With no other applicants in the pipeline, the state will reopen the selection process Nov. 1, hoping to find qualified bidders willing to pay a $20 million licensing fee to operate one of three online-only sportsbooks allowed by the Illinois Sports Wagering Act. Applicants will have until March 1 to submit a bid.
The state struck out in its first attempt to land an online-only sportsbook to enter the competitive Illinois sports wagering market.
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Four companies applied to the Illinois Gaming Board last year for the three online licenses, which are not tethered to casinos, racetracks or sports venues.
Tipico, an international sportsbook based in Malta, missed the Dec. 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 the minimum qualifications and was disqualified,” according to the gaming board. On Oct. 17, FuboTV announced it was closing its Fubo Gaming subsidiary and ceasing operation of its online sports wagering business to “reach longer term profitability goals.”
That left Tekkorp/Caliente as the only remaining applicant, but its bid was facing increasingly long odds in recent months.
In May, a Washington, D.C.-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, the former mayor of Tijuana. The group raised decades-old allegations that Rhon was involved in everything from drug trafficking to the illegal transportation of endangered wildlife.
While Tekkorp refuted claims that Caliente Interactive was owned by Grupo Caliente, the concerns proved moot. In a September proxy filing, Tekkorp said capital market conditions had deteriorated and it was exploring “alternative opportunities” with Caliente. The company was seeking an Oct. 13 shareholder vote to extend the merger deadline.
In an Oct. 4 filing with the Securities and Exchange Commission, Tekkorp said it was no longer pursuing a merger extension and would begin winding down operations Oct. 26.
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Illinois sports betting generated $8.5 billion in wagers and $611 million in adjusted gross receipts — the money kept after winnings are paid out — in fiscal year 2022, according to an annual wagering report released by the state last month. That represents a 61% increase in revenue during the fiscal year, which ended June 30. At a 15% tax rate, the state collected $92 million in tax revenue, along with another $50 million in licensing fees.
The state has nine operating retail sportsbooks, seven of which offer online sports betting. In March, Illinois permanently waived the in-person registration requirement, allowing online platforms to compete for customers across the state. Online wagering accounted for 96% of the sports betting revenue generated in Illinois during fiscal year 2022.
FanDuel, which is associated with the Fairmount Park horse racing track near St. Louis, was the state’s top sportsbook, with more than $253 million in adjusted gross receipts for the year, according to the report. DraftKings, which is partnered with the Casino Queen in East St. Louis, was the state’s No. 2 sportsbook with nearly $148 million in adjusted gross receipts, followed by BetRivers in Des Plaines at about $99 million.
Illinois ranks third in total handle among the states that have legal sports betting, according to a September report by Eilers & Krejcik Gaming, a California-based research and consulting firm.
