On Sunday night, Illinois senators passed a budget that featured a sports betting tax increase. This increase will see a nearly 200% increase on the current tax paid, with the decision being met with criticism from operators in the state, as their share prices all took a significant hit.
Impact on Operators
The new tax hike is set to exert immense pressure on major operators in the state, with the tax rate soaring to 40% for companies generating over $200m in AGR. This will catapult Illinois to the second-highest taxed state in the United States, trailing only New York at 51%.
The bill will now go to the house, and if approved, it could significantly impact sports betting in the state. It will not just be big names that are hit hard by this, with companies with revenue up to $30m having to pay a 20% tax on their AGR.
This is an increase from the 15% tax that operators have been paying in the state since it opened its doors to sports betting in 2021.
Negative Industry Reaction
Unsurprisingly, operators and industry insiders have widely disapproved of this decision and are now grappling with the implications of this significant tax increase.
The Sports Betting Alliance (SBA), which consists of major operators like BetMGM, DraftKings, FanDuel, and Fanatics, were quick to respond. Lobbyist Jeremy Kudon took to X, posting: ““This tax hike means worse products, worse promotions and, inevitably, worse odds for Illinois customers – not to mention provide a massive leg up to the dangerous, unregulated illegal offshore sportsbooks who pay no taxes and adhere to none of Illinois’ sports betting regulations.”
He also implied that major sportsbooks would have to reconsider their position in the state if the tax hike was approved.
