Tekkorp Potentially Abandoning Illinois Digital License Application Process
Tekkorp Digital's Pursuit of Online Sports Wagering License in Illinois Halted
In a significant development for the Illinois sports betting industry, Tekkorp Digital, the only applicant advanced by the Illinois Gaming Board in late April for an online-only sports wagering license, has announced it will not seek a shareholder vote to extend negotiations with Playtech, Caliente Interactive, and Caliplay. Consequently, the company has decided to step away from its plans to enter the Illinois market.
Tekkorp Digital, a special purpose acquisition company (SPAC), launched in September 2020 and raised almost $300 million in its Initial Public Offering to venture into the sports betting marketplace. The company has been in discussions with Caliente Interactive, a Mexican-based sportsbook owned by Playtech, since December, but a deterioration in market conditions led to a shift in focus from acquiring Playtech to considering acquiring Caliplay.
Initially, Tekkorp Digital was an unexpected entrant in the process, as Betway withdrew its application during the procedure, and Fubo Sportsbook was rejected. There were also reports that Tipico was not considered due to a late application, which was submitted less than 15 minutes after the deadline.
The Illinois market has become one of the top-three sports betting marketplaces in the United States, with a handle of $14.2 billion since its launch in March 2020, even though it currently boasts only seven licensed operators. Along with Illinois, New Jersey, Nevada, and Pennsylvania are the four states surpassing $1 billion in operator revenue during the post-PASPA era.
The potential extension talks, initially slated for October 26, would not have been sufficient for Tekkorp Digital to complete its initial business combination, according to an SEC filing. If shareholders do not approve the extension and negotiations with the aforementioned parties cannot be finalized, Tekkorp Digital plans to cease operations and potentially withdraw its application for the online-only license.
The $20 million price tag for an online-only license is substantial, but the limited paths to enter the large-market state make it a viable option due to casinos and potential racinos being allowed only one mobile skin in Illinois. At present, there are 12 venues licensed for retail sports wagering, with nine currently accepting bets. Five mobile books—Barstool Sportsbook, BetMGM, BetRivers, Caesars Sportsbook, and DraftKings—are tethered to casinos, while FanDuel and PointsBet are tied to the state's two horse racing tracks.
The limited availability of mobile tethers among casinos not offering retail wagering remains undetermined, with two other applicants—WynnBET and Bally's—also having undetermined casino tethers. The market has seen recent growth, with BetMGM launching its mobile sports wagering in March 2021, coinciding with the start of permanent remote registration, following repeated suspensions of the in-person registration requirement during the COVID-19 pandemic.
As of the most recent available information, Tekkorp Digital has not resumed its pursuit of an online-only sports wagering license in Illinois. The Illinois sports betting landscape now features ten licensed and regulated sportsbooks, with multiple prominent brands operating in the state.
Tekkorp Digital, despite initially pursuing an online-only sports wagering license in Illinois, has chosen to step away from its plans, halting further negotiations with Caliente Interactive, Playtech, and Caliplay, thus discontinuing its entry into the Illinois sports betting market. The company, having launched in September 2020 to venture into the sports betting marketplace, had planned to pay a $20 million price tag for the online-only license, eventually deciding otherwise due to its inability to complete its initial business combination with an extension of talks.
