The Supreme Court heard the Christie v NCAA case that seeks to overturn the Professional and Amateur Sports Protection Act of 1992. If successful, this would likely make it legal for states to allow and regulate sports betting.
So let's say it is successful, it seems to me that it would make sense for Illinois to allow such gambling and try to generate revenues from it. Here are some ways I could see it happening.
The Illinois Lottery:
The lottery would perhaps be the easiest way to bring this to the state relatively quickly.
The lottery could develop a parlay game.That is you have to get multiple bets correct in order to win and then do it either as a para-mutual game (where the winners split the pot) or just underwrite the game extensively.
So, for example, you had a parlay card where you predicted the winners of 5 football games. Let's say this game generated $1,000,000 in bets in a given week. The state could take 10% off the top for taxes, and let's say the operator took 10% of what was left for operating fees and vendor rewards. That would leave $810,000 in the prize pool. Those who got 5 out of 5 would split 90% of the pot and those who got 4 out of 5 would split the remaining 10%.
Streight up betting on events:
I think this might be harder to implement this for the lottery because it would create basically a large set of products (one for each sporting event as it were). It would also increase the lottery's risk in case a bet didn't go its way. It could eliminate that risk by making each individual event a para-mutual type bet but depending on the event the pool would be too small to be interesting for a bettor.
The Tracks and their OTB facilities as betting facilities:
This might be an easier implementation than the lottery options. Just let them operate like William Hill, betfair or Bet Fred for example. The state could generate revenues by just taking a slice of every bet and could require the operators to kick some of the revenue to the horse racing industry by increasing purses. This would likely make the tracks and the racing industry very happy and would make sports betting available, but not everywhere.
Video Poker Locations:
Allow an additional machine that would take sports bets. However instead of the facility taking on the bet risk (which seems a bit too risky to me, yes that is kind of ironic) that there would be underlying operators (the machine owners) who could set odds and payouts. No single underlying operator could operate more than 25% of the locations in the state that would have the units. The state could take a cut of the bets or just a cut of the revenues.
Complete Stand Alone Betting Shops:
This would be the longest option to implement, but it would be an option.