Gov. Pritzker ends executive order for online registration, despite success since last summer

By Mark R. Smith, US Correspondent

While the COVID-19 environment of the past 13-plus months has been the reason that many states have required gamers to register online, the effective vaccines are slowly leading the gaming industry back toward normalcy.

That progress has led Illinois Gov. J.B. Pritzker (seen below) to shift from the online approach back to in-person registration at brick-and-mortar locations ― which are usually casinos and race tracks ― though the move has left many industry observers scratching their heads.

Those observers include those who were involved in an analysis by Washington, D.C.-based iDEAgrowth entitled In-Person Registration For Online Sports Betting A Quantitative And Qualitative Analysis.

Key Findings

The group concluded “that in-person registration is likely to significantly restrict the revenue potential of legal online sports betting, the competitiveness of legal markets and the tax revenue that flows to state governments. Policymakers should carefully weigh these harms against any perceived benefits of an in-person registration requirement for online sports betting.”

Among the key findings of the study were that 76 percent of bettors said they should be able to create online accounts without in-person registration and that 80 percent of bettors would only be willing to drive an hour or less to create an online sports betting account.

This analysis is based on a proprietary survey of sports bettors in Iowa (the largest active market that requires in-person registration) that was conducted exclusively for the report, findings from other consumer surveys and a survey of comparable domestic and international sports betting markets.

Excluding the everyman

Gene Johnson, executive vice president of Hinsdale, Ill.-based Victor Strategies, who co-authored the study, said in-person registration “is basically a break in the development of mobile gaming.

“It’s put in place by the regulatory authority to protect in-state interests from the larger operators. Using Iowa as an example,” Johnson said, the state “gave a two-year interval for small casinos to get up and running before they opened up for mobile market for the bigger players.”

But in Illinois, “it was different,” he said. “The [executive order] was designed to exclude specific operations from the market. You had to own a casino or race track in the state in order to avoid being put into the penalty box, which gave an advantage to the in-state operators.

‘What happened was that FanDuel and Draft Kings found ways to circumvent the penalty box, thus the executive order seems to no longer make sense. The governor said [the return of in-person gaming was] due to COVID-19 restricts being relaxed, but what it really does is imposes a break on adoption by consumers.”

Back to Iowa, the state “saw 43 percent increase in handle when the in-person requirement expired,” Johnson said. “That gives you some idea of how much the demand was suppressed.”

What was learned from the Iowa study “is that what the restriction does is discourages people who live farther away than about 15 minutes from brick-and-mortar facility from signing up. Its makes sports betting les convenient for prospective sports betters.

“So you’re excluding the everyman who would have signed up due to that inconvenience ― and mobile is all about convenience. You’re also excluding the shark better who is currently betting offshore,” said Johnson, “and online betting is intended to raise tax revenues and reduce illegal betting. So in the case of both states, excluding online registration defeats both purposes.”

As for Pritzker’s office, spokesperson Jordan Abudayyeh said “Illinois is currently in Phase 4 with vaccination rates rapidly increasing and casinos around the state have reopened with safety guidelines in place, so the suspension of in-person sports betting registration requirements is no longer needed.”

Rob Norton, president of Cordish Gaming Group, took that thought a step further, offering that encouraging in-person registration can also mean “more people registering in the brick-and-mortar casino can often mean more money spent in the location for gaming, dining, etc.”

The American Gaming Association declined to comment for the story, but John Pappas, a Washington, D.C.-based gaming industry consultant, echoed Johnson’s views.

“Forcing consumers to go to a physical location to sign-up for a mobile product runs completely counter to how Internet commerce works and succeeds,” said Pappas,. “The suspension of the in-person requirement, due to the COVID-19 pandemic, has vaulted Illinois to one of the top spots for betting handle, operator revenue and most importantly, tax revenue.

“It is baffling that the state would return to the arcane way of conducting an ‘online’ business especially when the pandemic has not completely receded,” said Pappas. “Unless lawmakers take action to amend the law and remove the in-person requirement, it will weigh down the future success of Illinois sports betting.”

The Iowa analysis available for download at https://ideagrowth.org/impact-of-in-person-registration

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