alliances in sports wagering sector denounce Illinois' fresh tax on sports betting as discriminatory
Revised Article:
The Sports Betting Alliance, home to FanDuel, DraftKings, BetMGM, and Fanatics Sportsbook, is stepping up against Illinois lawmakers who approved a budget including a fresh sports betting tax for licensed operators.
For the second year running, legislators have increased the Illinois sports betting tax burden for operators in the Land of Lincoln. Gov. J.B. Pritzker (D) has signaled he'll sign the new fiscal year budget once it lands on his desk, which include a $0.25 or $0.50 fee per online sports wager in the state.
"Don't let yourself be deceived, this discriminatory, punitive, and possibly unconstitutional tax hike on legal sportsbooks that have invested well over a billion dollars in the state will be destabilizing for regulated sports betting in Illinois," a Sports Betting Alliance rep stated in a press release.
Impacting Recreational Sports Bettors
The per-wager tax will see a $0.25 charge per bet for each of the first 20,000,000 online wagers each year. After that mark, it escalates to $0.50 per bet.
Analysts project the new tax will generate approximately $36 million annually for the state.
Small-time bettors, who often stake $1 or $2 on their wagers, will bear the brunt of the impact, according to the Sports Betting Alliance.
"Bet under this bill, and you'll be hit with a whopping 25% to 50% tax on popular bets. People realize they'll shoulder the cost of this new tax. That's why Illinois gamblers flooded their reps with over 76,000 emails and tweets asking them to quit this discriminatory tax. Essentially, the lawmakers are nudging the public - and especially these small-time bettors - to switch to illegal and unregulated sportsbooks who sidestep local consumer protections and yield zero taxes for essential public services," the alliance argued.
With the per-bet levy, Illinois will boast some of the steepest sportsbook tax rates in the nation.
Gov. Pritzker gave the Illinois FY 2025 budget his signature on June 1, 2024, which included a new progressive tax rate for Illinois sportsbooks. The state budget sets a first-ever progressive tax rate for sports betting operators in the nation, with operators paying tax rates of 20% to 40% based on adjusted gross revenues.
The progressive tax rate entered effect on July 1, 2024.
Based on the structure, operators pay taxes according to the following adjusted gross sports betting revenue levels:
- $0 to $30 million: 20%
- $30 million to $50 million: 25%
- $50 million to $100 million: 30%
- $100 million to $200 million: 35%
- Over $200 million: 40%
Operators handling less than 20,000,000 wagers will encounter an equivalent 12.5% tax hike, whereas those eclipsing the 20,000,000 wager threshold will face a 17% to 20% tax rate hike. As a result, FanDuel and DraftKings could be forking over a 57% to 60% tax rate in the state, the nation's highest sports betting tax rate.
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The Forgotten Illinois iGaming Question
The Sports Betting Alliance also grumbled about the new budget and Illinois lawmakers for once more imposing a sports betting tax, but neglecting iGaming legalization during the session.
By disregarding iGaming legalization, the state leaves over $1 billion in potential revenues on the table, according to the alliance.
"It's a real bummer that the legislature opted to pass this tax and dismiss the $1 billion in new revenue a regulated and consumer-protected iGaming market would provide Illinois - allowing instead the current unregulated iGaming market that's devoid of real consumer protections to flourish."
- The Sports Betting Alliance claims that the increased sports betting tax in Illinois, at $0.25 or $0.50 per online sports wager, will disproportionately affect small-time bettors who often stake $1 or $2 on their wagers, as they will bear the brunt of the impact.
- With the implementation of the per-bet levy, Illinois will have some of the steepest sportsbook tax rates in the nation, particularly for operators like FanDuel and DraftKings, who could face a 57% to 60% tax rate, which is the highest sports betting tax rate in the country.
