Caliente Interactive Approved For Mobile Sports-Betting License In Illinois

April 29, 2022
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Caliente Interactive, the largest gaming company in Mexico, is one step closer to entering the lucrative U.S. sports-betting market after Illinois regulators determined it met the minimum qualifications for an online-only wagering license.

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Editor's Note: This story was updated at 7:43 a.m. with comment from Caliente Interactive

Caliente Interactive, the largest online gambling operator in Mexico, is one step closer to entering the lucrative U.S. sports-betting market after Illinois regulators determined the company met the minimum qualifications for an online-only wagering license.

The Illinois Gaming Board (IGB) on Thursday (April 28) announced the results of its application process for the three online-only licenses available under the state's 2019 Sports Wagering Act, which also provides for online sports betting via casinos and racetracks, as well as retail sportsbooks at major sports arenas.

Marcus Fruchter, administrator for the IGB, told the board that Tekkorp Digital Acquisition Corp., doing business as Caliente Interactive, was the lone applicant that met the “minimum qualifications for licensure under the act and is therefore deemed a qualified applicant.”

The IGB voted 3-0 without comment to approve Fruchter’s recommendation, allowing regulators to determine Caliente’s suitability for a license, which will cost $20m upfront.

Fruchter also told the board that Fubo Gaming’s application was rejected, while an unidentified third applicant opted to withdraw its application on February 7.

He said Tekkorp and Fubo were informed of the board’s decision on April 25.

Currently, there are seven mobile sportsbook operators all tethered to casinos and racetracks in Illinois: BetRivers; DraftKings; BetMGM; FanDuel; PointsBet; Caesars; and Barstool Sports.

Caliente Interactive is an affiliate of Grupo Caliente, which is one of the largest gaming companies in Mexico and operates racetracks and numerous gaming halls across the country.

The company is partnered with Playtech for its interactive business and is widely believed to control well over 50 percent of the overall Mexican online gambling market, having been the most prominent operator in Mexico since launching in 2014.

The company is reportedly merging with Tekkorp Digital Acquisition Corp., a Las Vegas-based special purpose acquisition company (SPAC) listed on Nasdaq. Under the terms of the deal, a $250m private investment in public (PIPE) would reportedly be made by Spanish language broadcasting company Univision and its shareholders, providing Caliente with capital to expand in the U.S. and target the Mexican-American and Hispanic market.

Another $190m from other institutional investors would be included in the deal, according to reports. UK-based Playtech also has option to convert its interest in Caliente Interactive into equity.

"We are pleased to be considered by the Illinois Gaming Board and look forward to working with the Board on its license eligibility review in the coming months," Caliente said in a statement.

"Market access is important for success. Tekkorp comprises seasoned executives like Matt Davey and Tony Rodio who have been licensed in multiple states in the U.S. and Illinois will be a key state due to its high Hispanic population. However the timing of the license application was driven by the timetable set by the IGB."

Although Fruchter did not disclose the reason why Fubo Gaming’s application was rejected, a statement emailed to VIXIO GamblingCompliance said the company disagreed with the board’s decision.

“Fubo Gaming respectfully disagrees with the decision of the [board] and believes the company meets the standards to continue through the competitive selection process,” the company said.

Fubo Gaming said it was evaluating its options following the board’s decision.

“The Illinois Gaming Board determined … that a ‘key person’ associated with the company was ineligible for licensure and therefore the company was disqualified as a bidder,” the company said.

In its statement, Fubo confirmed the “disqualification was based on a portion of a statute unique to the competitive bidding process and the specific license available in connection with the process.”

“Fubo Gaming has been issued operating licenses by gaming regulators in other states, each following extensive background investigations into the company and its principals,” the company added. “The basis for which the company has now been disqualified in Illinois did not preclude its licensure by these other states.”

Fubo Gaming, a subsidiary of TV streaming platform fuboTV Inc., in February announced it had secured market access agreements for Fubo Sportsbook in Mississippi, Louisiana and Missouri through Caesars Entertainment, bringing the total number of states it is active in to ten.

Currently, Fubo Sportsbook operates in Iowa and Arizona, with the company also licensed in Tennessee and having secured market access for New Jersey, Pennsylvania, Mississippi, Ohio, Indiana, Iowa, Missouri, Louisiana, and Texas, according to VIXIO GamblingCompliance's U.S. Sports Betting Partnership Tracker.

Fruchter reminded the board that the Sports Wagering Act as part of the 2019 gaming expansion law capped the number of online-only sports betting licenses at three subject to a rigorous bidding process. The application period opened on August 5 and closed on December 3, 2021.

He said the IGB received three applications before the close, and one submission after the close on December 4, which was rejected. The IGB did not identify the late applicant that was rejected.

Fruchter reminded board members that being found “qualified and declared the winning bidder are neither a finding of suitability nor a grant of licensure.”

“It is simply a finding based on information presently known by the IGB that Caliente and its key [staff] meet the minimum suitability criteria,” he said.

Fruchter did not tell the board when regulators expect to present their findings from Caliente’s suitability investigation.

He said Illinois gaming regulations also allow the IGB to hold a supplemental “competitive selection process” to award the unissued licenses after the initial license is issued. Fruchter said he expects regulators to move forward to issue the remaining two licenses.

See also: Q&A: Sports Betting in Illinois

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