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Startup Boom Expected From Legal Sports Betting in Illinois

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A thriving tech industry, combined with an environment that has a strong history in financial markets, could help propel a sports betting ecosystem that extends far beyond the sportsbook.

Illinois lawmakers passed Bill SB690 last Sunday, which allows the creation of new casinos in Chicago and surrounding suburbs, and also legalizes sports betting in the state. The passage of the bill makes Illinois the 13th state to legalize the business of regulated sports betting, and the Chicago tech industry believes the atmosphere is ripe with opportunities for new companies who can play a role in the emerging sports betting industry.

The new Illinois sports betting law will allow mobile wagering. This is an option that not all states have adopted at the onset of their legal sports betting legislation, typically resulting in lower revenue than states that do allow mobile betting. Legal sports bets can also be placed at any casino or race track, as well as at sports venues like Wrigley Field. Customers will have to first visit one of these locations in person to register a mobile betting account.

Early industry giants DraftKings and FanDuel will not be able to operate for the first 18 months of legal sports betting in the state, but other startups have a prime opportunity to get in on an industry that is experiencing rapid growth. There are particularly strong possibilities for startups who develop business-to-business platforms, or to media companies who are able to capture and deliver a sports betting audience.

Chicago INNO quoted Yelena Shkolnik as believing this is a great time for investors to back startups operating within the sports betting space. Shkolnik is Vice President of Jump Capital, a venture capital firm that believes Chicago has all the ingredients for a thriving sports betting ecosystem.

It’s probably a great idea today to start a company that gathers potential customers for those books,

Shkolik believes there are opportunities for a broad array of startups that would provide products and services within the sports betting ecosystem. Advertising analytic solutions, products to track compliance standards, and even peer-to-peer betting products are all examples of startups venture capital firms will be looking at.

This theory is mirrored by James Chisholm, who was quoted as saying there's a “broader economic opportunity” when states legalize sports betting, especially where mobile betting is allowed. Chisholm is Director of Global Public Affairs for DraftKings.

States that offer mobile betting have a clear advantage over those that do not. In New Jersey, mobile betting has been responsible for 75% of all wagers placed on sporting events. The state expects to see over $3 Billion in sports bets this year. States that have no embraced mobile betting have been less successful at implementing sports betting.

The concept is simple and to the point. The easier it is for someone to make a bet, the more bets will be made, meaning the state will generate more tax revenues and there will be more opportunities for young startup companies to participate in the sports betting ecosystem.

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