SBA exclusive: Chicago taxes ‘can’t be a money grab’

Outside of your role as Chairman of the Sports Betting Alliance (SBA), what is your experience in helping to expand sports betting legalization in the US?  

I first contacted FanDuel in November 2014, and started representing FanDuel and DraftKings on February 1, 2015. We've just had an anniversary! That was obviously to help them come up with a plan to engage with states on daily fantasy sports (DFS). It was before all of the Attorney Generals started issuing opinions and all the chaos around that issue, but that was my introduction to gaming. I didn't have a gaming background. It's a long story, but I became aware of DFS and thought this could be an issue states would grapple with. I guess I turned out to be right about that... 

I reached out with a cold call email to Nigel Eccles, Co-Founder of FanDuel. I must’ve sent about 100 of those and he was the one that answered that cold call email. It was very fortuitous to get engaged and start working on it. I had already in my past life represented Dish and DirecTV, so I'd represented competitors before. I think it's always easier to represent competitors before state legislatures or regulators because their positions are often almost identical. Then you're not getting two different stories or different asks, you can work that all out behind the scenes.   

I suggested I could represent both, so FanDuel called DraftKings to push that idea, and it's really been a tremendous relationship over the last 11 years. We've added to that with other companies once sports betting became legal. In 2020, I started to represent BetMGM, then we added Fanatics for a period, I have bet365 as well. We formed the Sports Betting Alliance simply because it was becoming an administrative nightmare to get five signatures for our 80-85 state lobbyist contracts.   

Were there any cases or disputes that helped you gain insight to the sports betting industry?  

There were so many battles in 2016. At my first G2E, 10,000 people were all just looking at me like they wanted to murder me! But through that process, I came to understand the issue as more technology-oriented, not necessarily understanding all the ins and outs of gaming. John McManus at MGM really gave both my clients, and especially me, a tutorial on why it was so important to have some forms of consumer protections; and understanding why someone who is in the regulated gaming industry should be engaged in something like that. 

At the time, there was a big battle over whether that was gaming or not, possibly something that was gaming adjacent even. It was so important that we hit certain standards. There were age limits, consumer protections. I don't think we did RG tools with DFS. To this day it really is a game of skill, at least the traditional DFS that we're talking about. It was an important lesson that really helped as I started to become far more familiar with online sports betting and the regulations or legislation that went around that.   

What is the current status of the SBA’s ongoing dispute in Chicago following new revenue tax proposals?  

Obviously it's in litigation, but I think that was a last resort. We spent months trying to work with the city to explain A, why we believed they did not have the authority to tax us, and B, that it wasn't a good tax or regulatory policy. There still is a concern on our part that other Illinois municipalities will follow this precedent and just create a complete morass of licensing, taxes, etc. for something that really should just be done at the state level. Our concern is exacerbated by the sense that this can't be a money grab. It's very dangerous.   

I think it puts the companies in a very precarious spot where, as the taxes go up, that's money that comes right out of their pockets. And if you take it out of their pockets, it comes out of something else. Some people will say, ‘oh, I guess there's less ads, so that's a good thing.’ But the reality is there's less of everything. There's less customer support, there's less money that can go into innovative responsible gaming. We're hearing on social media about the concerns with online gaming, but those concerns are not going to be addressed by raising our taxes.   

Given the SBA’s prior warning to Mayor Brandon Johnson, does a possibility still remain of the Alliance’s operators choosing to exit Chicago?  

I don't think we're at a point yet where any of the companies I represent will leave Chicago. For some of the smaller operators I don't represent, it will get to a point where it just doesn't make sense for them. I've read interviews where they've said as much. But for now, Chicago is such a big market. It's been seven years since PASPA, almost eight now, and I know it seems like we're already a mature industry, but we're still in the early days. I just don't think companies are prepared to give up on the second or third-largest metropolitan area in the US.