• MAY 31, 2019


    Echoes of 2009 fight with Wirtz in Bluhm sports betting battle

    Rocky Wirtz, left, and Neil Bluhm. [Submitted]

    Ten years ago, Illinois was poised to pass a $31 billion capital plan funded in part by a projected $162 million annually in taxes on candy, sweetened beverages, hygiene products, beer, wine and liquor and a projected $300 million in annual tax revenue from video gaming terminals once the industry was fully up and running.

    Lawmakers voted on the most contentious part of the funding sources, including those alcohol taxes, on June 30, 2009 during a special session after the regular spring legislative session had adjourned in May.

    The taxes were set to go into effect on Sept. 1 of that year, but in the week leading up to the effective date, Chicago Blackhawks owner Rocky Wirtz, the head of the company now known as Breakthru Beverage Illinois, filed suit against the state in Cook County Court.

    Wirtz had threatened to sue that summer as then-Gov. Pat Quinn signed the deal. In the lawsuit, to which Wirtz’s company was also a plaintiff, the beverage magnate alleged the taxes violated the Illinois Constitution by violating the the “single subject” clause, which says that non-appropriations bills “shall be confined to one subject,” and appropriations bills “shall be limited to the subject of appropriations.”

    The suit also alleged that the legalization of video gaming in Illinois violated federal gambling rules.

    After two-year court battle, in which the case wound its way up through the First District Appellate Court and eventually to the Illinois Supreme Court, the state eventually was found to be in the right in a unanimous decision in July 2011.

    Even though it ended in a victory for the state, the court battle left scars on the capital plan, dubbed Illinois Jobs Now!, which forced the state to backfill from general revenue funds what it couldn’t borrow during the depths of the Great Recession.

    Ten years later, as Illinois was poised to legalize sports betting as part of a bigger gaming package — a package that would, in turn, help fund a long-awaited capital bill — another wealthy man has injected himself into negotiations in Springfield, and other wealthy men are threatening to sue the state.

    Related: Mass transit advocates, taxed industries balk at Pritzker's capital plan framework

    Billionaire Rivers Casino owner Neil Bluhm and the CEOs of the fantasy sports and sports betting tech companies FanDuel and DraftKings have been battling it out publicly for the last month over the rights to sports betting in Illinois.

    Gov. JB Pritzker had made sports betting a top priority, as his budget counts on $200 million from sports betting. In February, he warned lawmakers away from a “Christmas tree” gaming bill, and asked them to send him a standalone sports betting bill, saying the state needed to act quickly to capitalize on the market opened up by a U.S. Supreme Court decision last year.

    The governor on Thursday said he had changed his thinking on a standalone sports betting bill, saying he felt “confident” lawmakers would get a gaming bill.

    “I know there’s still some conversation that’s gone on about sports betting in recent days,” Pritzker said at an unrelated event Thursday morning. “This is, I think, an important thing for the state to enact. What’s most important here is that we get a good bill. The legislators have been working hard. My office has been in those meetings. Both sides of the aisle have been engaged in those meetings. It’s been a bipartisan effort. I feel pretty confident we’re going to get there.”

    But Bluhm, the chair of Des Plaines-based Rivers Casino, and a generous campaign donor to lawmakers in both parties, has urged lawmakers to ban FanDuel and DraftKings from sports betting in Illinois for a period of time, based on the allegation that they are “bad actors” who have been operating illegally in Illinois.




    Over the course of negotiations, the length of the so-called “penalty box” has been cut in half twice, from six years earlier this month to three years, and most recently down to 18 months. FanDuel and DraftKings told The Daily Line last week the companies were prepared to sue the state if they were banned from operating in Illinois for a set period.

    Related: FanDuel, DraftKings threaten to sue if ‘bad actor’ language excludes them from sports betting

    FanDuel and DraftKings exploded on the scene a few years ago as pioneers in daily fantasy sports, which allows sports fans to compete against each other by building a team of pro athletes. Those who emerge victorious can bank their winnings daily — rather than at the end of a season in a traditional fantasy league.

    The companies began focusing on sports betting after the U.S. Supreme Court found a New Jersey ban on sports betting unconstitutional a year ago. Bluhm had been pushing against FanDuel and DraftKings when they were just focused on daily fantasy sports, but turned up the intensity on the companies after Bluhm’s Rush Street Gaming company last year introduced PlaySugarHouse, a sports betting website that competes with DraftKings and FanDuel in New Jersey. In that state, the two companies have more than 80 percent of the market share.

    A longtime lobbyist, who agreed to speak to The Daily Line on the condition of anonymity, said this week that there are parallels between the Wirtz fight and the Bluhm fight.

    But the lobbyist also pointed out the contentiousness of gaming bills, and said it’s no mystery as to why they’ve failed over and over again.

    “Almost every gaming bill in our lifetimes has failed at the end of session,” the lobbyist said. “They’re just so, so complicated…There’s no small pockets in gaming. It is what it is.”

    State Sen. Terry Link (D-Vernon Hills) told The Daily Line also acknowledged the parallels between the fights this week, but said people — including Wirtz and Bluhm — are generally just doing their jobs.

    “It’s like I say all the time down here: I don’t get mad at the Republicans because they don’t agree with us, and I would hope they don’t get mad at us because we don’t agree with them,” Link said. “People have different sides. People have different clients. And in Mr. Wirtz’s case, he had a different client. It was his own…I just think that we get too wrapped up in how we perceive people and these types of things. This is what happened in Mr. Wirtz’s case and Mr. Bluhm’s case.”

    A senior Democratic lawmaker, who agreed to speak on the condition of anonymity, told The Daily Line this week that the Wirtz fight was “a little different,” considering the content of the 2009 capital bill.

    “We’d done a lot of stuff in that bill. Now, we could very well do a lot of stuff in this bill,” the lawmaker said. “So legally, I think people were just puzzled by the legal argument.”

    “And here, this is just brute force opposition just because,” the lawmaker continued. “We wouldn’t do a gaming bill in the context of a gas tax bill. We would have to do separate bill. This is a different dynamic. This is just brute force against brute force.”

    Illinois Auditor General Frank Mautino, a former Democratic member of the House who carried some of the 2009 capital bill funding source, told The Daily Line that he had known there would be a legal challenge, but he had been prepared for it because of legal challenges to fund sweeps in the recession following the terrorist attacks on Sept. 11, 2001.

    That court challenge, which also ended up at the Illinois Supreme Court, ended in a loss for the state, however, and the state had to replace certain funds that had been swept to fill budget backlogs.

    “High-level staff and [appropriations committee] chairs…know there could always be a [legal] challenge,” Mautino said. “We would make sure that when we had to increase fees and taxes, we did it very carefully so that it would withstand any questions.”

    The 2011 decision also had far-reaching effects, including the single-issue clause. Marc Poulos, the executive director and counsel for Indiana, Illinois, Iowa Foundation for Fair Contracting, who works with the International Union of Operating Engineers Local 150, wrote an amicus brief in support of the state during the 2011 Illinois Supreme Court challenge to the capital bill.

    Poulos said the court’s decision was a positive for the legislative process in Illinois.

    “Sometimes you get into these larger scale issues like capital or gaming and you’ve got to package them together because they’re tied together,” Poulos said. “If i’m a legislator and you say, ‘Oh trust me, this will fund vertical’ and you never call vertical — this is better.”

    Former House Minority Leader Tom Cross (R-Oswego) told The Daily Line that he didn’t have much memory of the court challenge from Wirtz.

    “There’s the legislative process, people have the right to do what they want to do,” Cross said. “I never took things personally or got angry about them.”

    Cross’ successor, House Minority Leader Jim Durkin (R-Western Springs) told The Daily Line that lawmakers shouldn’t be afraid of legal challenges, and said if the CEOs of FanDuel and DraftKings wanted to sue the state, they could “go ahead.”

    “If we’re going to have to legislate based on the fear of a lawsuit, then there’s no point in us coming down here,” Durkin said. “Everything we do is subject to scrutiny by the courts.”

    Durkin sided with Bluhm in the battle between the casino owner and FanDuel and DraftKings, telling The Daily Line this week that the companies operated in a “very gray area” that was “almost black” in terms of its illegality.

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