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The Illinois Legislature this week is expected to send a final budget, with a major sports betting tax increase, to the governor for his consideration.
In its current form, the $53.1 billion state budget includes a sports wagering tax rate of 20%-40%, depending the operator’s annual revenues. That tax amount is up from the current 15% for online operators.
An alliance of sportsbook companies issued a statement on X (Twitter) this week critical of the tax plan. Called the Sports Betting Alliance, the group includes BetMGM, Fanatics, FanDuel and DraftKings.
Jeremy Kudon, the alliance president, said the increase will have a “devastating” impact on the industry, including “worse promotions, and inevitably, worse odds for Illinois customers.”
Currently, every state bordering Illinois, except Missouri, has legal sports betting. Nationwide, sports betting is legal in 38 states and Washington, D.C.
The proposed tax hike in Illinois also will give a “massive leg up” to unregulated offshore sportsbooks, which don’t pay state taxes, Kudon said.
In Illinois, operators will have to explore options, he said.
“Sportsbooks across the industry will have no choice but to reevaluate their level of investment and participation in the state should this become law,” Kudon saId.
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Tax Hike Awaits Final Approval At Statehouse
On Sunday, the Illinois state Senate approved the full budget, which includes the sports betting tax hike, sending it to the House of Representatives for that body’s anticipated consent. From there the budget goes to Gov. J.B. Pritzker at the Capitol in Springfield for his consideration.
The proposed sports betting increase will give Illinois the second-highest sports wagering tax rate in the nation, only behind the 51% rate on mobile sportsbooks in New York and New Hampshire, according to the American Gaming Association.
Lawmakers Turn To Sports Betting Taxes In Election Year
According to the State Journal- Register, the governor originally proposed to fund the budget with $1.1 billion in new revenue through tax increases. That figure faced resistance from legislators.
“Likely wary of increasing taxes during an election year, lawmakers were able to lower that earlier sum to a range of $840 million to $870 million in tax increases,” the Springfield-based newspaper reported.
However, “to the chagrin of sportsbooks operators like DraftKings and FanDuel,” the approved tax hikes included a boost in the tax on sports betting, the newspaper reported.
“The revised plan, originally calling for the (sports betting tax) rate to jump from 15% to 35%, is still expected to collect the same $200 million in additional revenues for the state,” the newspaper reported. “Overall, the approximately $350 million expected from the bumped tax will go to state coffers and capital projects.”
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DraftKings, FanDuel Feel Stock Market Impact
News of the sports betting tax vote in the Illinois Senate sent shares of publicly traded DraftKings and FanDuel owner Flutter Entertainment lower on Tuesday, MarketWatch reported.
DraftKings shares “sank 11.2% in morning trading, to put them on track for the biggest one-day selloff since they shed 27.8% on Nov. 4, 2022,” heading for its lowest close since Jan. 17, 2024, according to MarketWatch.
Flutter Entertainment dropped 6.2% “toward a four-week low,” the business news website reported.
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