Undue Economic Concentration RFQ Final~1.docx

ILLINOIS GAMING BOARD

JB Pritzker • Governor Charles Schmadeke • Chairman Marcus D. Fruchter • Administrator

160 North LaSalle ♠ Suite 300 ♣ Chicago, Illinois 60601 ♥ tel 312/814-4700 ♦ fax 312/814-4602

Request for Quotation

Description of Services Required:

The Illinois Gaming Board (“IGB”) issues this small purchase request for quotation to secure the services of a consultant (Vendor) to review, analyze, and develop a comprehensive methodology for calculating undue economic concentration within the video gaming industry as referenced in 230 ILCS 40/25. Additionally, the IGB is seeking assistance to review internal IGB methodology regarding economic concentration, market share, and competition and use that information to develop a replicable comprehensive methodology for determining undue economic concentration as defined in the Video Gaming Act 230 ILCS 40/25, IGB rules Section 1800.440, and Section 1800.340 (a)(6) and (d)(1). Note that per the Illinois Procurement Code, small purchases are capped at $101,800. Vendor must provide a quotation that includes the information requested below. The quotation should be expressed as a flat rate for completing the first draft of the report due on April 1, 2022, and as an hourly rate to address the IGB’s questions. The IGB anticipates Vendor will spend 10 hours addressing the IGB’s questions to furnish its final report by May 31, 2022.

Qualifications:

1. Vendor has consulted a regulatory body that oversees multiple forms of gaming over the past two years on matters related to casino gaming or video gaming.

2. Vendor conducted a market share study and/or analyzed the effects of economic concentration within the gaming industry in at least one other jurisdiction. Please provide at least one report from a jurisdiction.

3. Vendor has sufficient capacity to commit an engagement team whose members will work on this contract during the Delivery Period. Please provide a resume for Vendor’s staff members who will serve on the engagement team that demonstrates the following:

a. a lead team member with at least 15 years of experience with the gaming industry;

b. a team member who authored, in part, at least one market analysis or economic concentration study in the casino or video gaming industries. Please include the referenced study or studies;

4. Vendor must act in an independent and objective capacity.

Please disclose whether Vendor has any direct pecuniary interests in or current contractual relationships with:

a. any entity licensed by the Illinois Gaming Board; or

b. any entity arranging or providing financing for gaming projects, casinos, or any video gaming licensee.

Please note that any such relationship may disqualify the Vendor from receiving an award under this Request for Quotation.

Deliverables:

Vendor will receive information from the IGB Audit unit regarding market share and economic concentration in video gaming. Vendor must review and vet the IGB’s Audit team’s work on market share, competition, and undue economic concentration in video gaming. After Vendor reviews and vets the information, Vendor must produce a report that answers each of the following points and provides a recommendation for replicable methodology to calculate undue economic concentration in video gaming:

1) Review and validate IGB data compilation and reporting methodology for criteria outlined in Rule 1800.440 (c) (1). When reviewing the IGB methodology consider the following:

i. Confirm IGB’s interpretation of the “share of the market presently owned or controlled” per Section 1800.440 (c) (1) as a valid reporting structure to use or recommend a more effective calculation.

ii. Confirm IGB’s interpretation of “defined geographic radius” in the compilation and reporting of undue economic concentration data as a valid framework or recommend a more effective calculation.

2) Review and validate potential use of the Herfindahl-Hirschman Index (“HHI”) and compare/contrast to other known analyses.

3) Identify and recommend specific hierarchy of the 11 criteria listed in Rule 1800.440 under (c) (1) through (11), ordered from most influential to least to assist the Board in evaluating undue economic concentration impacts for video gaming transactions, licensure/renewal, and transfers of ownership.

4) Determine whether there should be a specific threshold or maximum percentage of the market, either across the State, or within defined geographic regions, a terminal operator would potentially own or control to constitute undue economic concentration.

5) Evaluate the effect sales transactions involving large groups of establishments (i.e. video café groups/chains) have on economic concentration and whether such factors should be integrated into a methodology for determining undue economic concentration.

6) Consider casino owner licensees and sports wagering licensees which can also be video gaming terminal operator Licensees and the related impact on economic concentration analysis.

7) Review the current undue economic concentration rules and provide a report on whether the Board needs to promulgate additional rules.

8) The 1st draft of the report is due April 1, 2021. The Board shall submit additional questions and responses to the 1st draft by May 1, 2022. The final report is due no later than May 31, 2022.

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