Illinois, which became the 15th state to legalize sports betting this week, has the potential to generate up to $11bn in annual wagers and $650m in operator gross revenue, but only if the market matures with the inclusion of online betting according to analyst

Dustin Gouker, lead analyst at the firm, described the state’s potential as “enormous”, but cautioned it has a long way to go to become a major player relative to the largest markets in the US.

“Launching the industry is obviously a momentous first step,” he said. “But because of regulatory roadblocks to online sports betting, it will be years before Illinois can enjoy the same kind of boom that we’ve seen in New Jersey, Pennsylvania, and Indiana.”

Of the 15 states now legal, only New York and Pennsylvania have a larger population from which to draw. And Illinois’ retail sportsbook market is expected to ramp up quickly, with five more to follow BetRivers’ Des Plaines launch this week. They include sportsbooks at Argosy Casino Alton, Hollywood Casino Aurora, Hollywood Casino Joliet, Grand Victoria Casino in Elgin, and Par-A-Dice Hotel Casino in East Peoria.

Fairmount Park Racetrack in Collinsville, near St. Louis, has also been approved for a temporary operating permit.

Significant hurdles remain, particularly for online sports betting, which isn’t expected to launch until later this year. And when it does it will require in-person registration for mobile accounts.

The Illinois law allows for three “stand-alone” mobile operators such as DraftKings and FanDuel. But because of the state’s in-person registration requirement, those would-be operators will not be able to accept a bet for at least 18 months. And with a hefty $20m fee to obtain one of those three licenses, it’s not clear which operators will apply.

“Illinois’ high licensing fees for online operators and its in-person registration requirements will undoubtedly stunt the growth of the industry,” Gouker added. “Even with the high fees, the appeal of the Illinois market will eventually be too much to resist for the country’s largest operators. But neighbor Indiana will be able to continue to cash in on the Chicago market until Illinois gets up to speed.”

Online sports betting is by far the most significant revenue driver in major US markets. In New Jersey, 87% of all sports bets in January were made online. By contrast Rhode Island, which has an in-person registration requirement, draws just 15% of its bets from online sources.

Illinois’ 10 existing casinos, three racetracks, and as many as seven sports venues are eligible to apply to open retail sportsbooks. Those sportsbooks will also be able to set up mobile sports betting apps.

According to Gouker, while the Illinois model isn’t ideal, it represents a positive development for the state’s bettors. “Most of the state’s residents should be able to place a bet in relatively close proximity,” he said. “And that is much better than the alternative.”