State lawmakers on Wednesday took the first step toward regulating online sports betting, a move that comes as the popular fantasy sports industry finds itself under fire in Illinois following an opinion from Attorney General Lisa Madigan declaring the practice amounts to illegal gambling.

Under legislation advanced by a House committee, fantasy sports would be legalized and taxed, with oversight falling to the Illinois Gaming Board — the same agency that oversees the state’s casinos, horse tracks and video machines at bars and restaurants. But state gaming regulators opposed the measure, saying it would be difficult to properly oversee gambling that takes place at home.

“The question is: Should gaming be this pervasive?” said Caleb Melamed, legislative liaison for the gaming board. “We don’t see a way to prevent teenagers or children even younger from getting their parents’ account numbers and using the Internet to play.”

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Supporters argued companies would be required to have safeguards aimed at detecting improper use, but said it was ultimately a parent’s responsibility to monitor their children. They contended the legislation struck the right balance between oversight, generating new tax dollars for the state and ensuring these businesses can continue to operate.

“This is an opportunity to create a safe space for these games to occur,” said sponsoring Rep. Mike Zalewski, D-Riverside.

The measure is backed by industry officials, who said they welcomed the chance to remove legal questions but maintained online sports betting is not gambling but a game of skill that requires careful study of individual players and teams. The daily fantasy sports industry has been under the microscope by attorneys general in many states.

“It’s really hard, if not impossible, to fix a fantasy sports contest. You can’t get one player to throw more touchdowns than the other team, and even if you did it would only be one of your 12 guys and you’re going against lots of opponents and what players they have,” said Peter Schoenke, president of Fantasy Sports Trade Association, which is based in Chicago. “The complexities are crazy, so it’s not a one-to-one compared to gambling, therefore it needs its own regulatory structure.”

Still, officials raised concerns that the new regulations could prove too burdensome for some smaller operators, who may cease to do business in Illinois.

The attorney general’s office has not weighed in on the legislation. Madigan has been sued by New York-based FanDuel and Boston-based DraftKings over her legal opinion, which they argue could put them out of business in Illinois.

Under the legislation, operators would be charged fees and taxes on a sliding scale based on how much revenue they generate. Application fees range from a low of $500 for companies making less than $100,000 in revenue a year, to $37,500 for companies that bring in more than $10 million a year. Taxes range from 5 percent on revenue up to $1 million, to 22.5 percent on revenue above $15 million and would be used to prop up education funding.

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Zalewski could not provide an immediate estimate on how much money the new rules might bring in.

Operators would undergo background checks and regular audits, and all employees and contractors would be banned from participating in betting. Companies would not be allowed to advertise at schools, college campuses or amateur athletic events.

Play would be limited to those 21 and older, and players would be lumped into separate skill categories based on how many games they’ve played or prizes they’ve won. The idea is to limit the type of games less experienced players can enter.

To control losses, players would be limited to depositing $3,000 into their gaming accounts every three months. That threshold could go higher, however, if a company determines a player has the appropriate financial footing. Prizes will be withheld from players who own child support payments.

The measure would expire in January 2020, at which point lawmakers could renew the legislation or change it.

In other action Wednesday, the Senate sent the House a measure to allow immigrants in the country without legal permission access to state-based financial aid for college. Sponsoring Rep. Iris Martinez, D-Chicago, said the bill would allow universities to offer scholarships to an estimated 1,500 students at the state’s four-year public universities who are succeeding academically but struggling to pay tuition.

The bill does not allow those students to receive scholarships under the Monetary Award Program, which colleges and universities have been struggling to cover this year amid the state budget impasse.

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