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Lawmakers in Illinois May Push Gamblers Toward Illegal Betting Operations Due to Proposed Revenue Measures

Illinois Legislature's Late-Night Move May Prove Regrettable: While sports betting companies appear to have handled last year's substantial tax increase, analysts fear that the recent attempt to extract more taxes from the gambling industry could instead yield negative results.

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Late-night taxation move by Illinois legislature could potentially lead to repercussions for the...
Late-night taxation move by Illinois legislature could potentially lead to repercussions for the gambling industry. Despite sports betting operators seemingly coping with last year's substantial tax increase, experts predict this new effort to extract more revenue might inadvertently result in a decrease in revenue for the sector.

Lawmakers in Illinois May Push Gamblers Toward Illegal Betting Operations Due to Proposed Revenue Measures

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Illinois' Latest Sports Betting Tax: A High Stakes Move with Potential Consequences

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The Illinois legislature's last-minute move in the wee hours of the night might have some unexpected implications. While the sports betting operators seem to have absorbed last year's heavy tax increases, experts believe this recent attempt to extract more tax dollars could backfire.

The newly-introduced per-wager tax is set to impact sports betting operators, especially given Illinois' already complicated and pricey regulatory landscape. Here's what you need to know.

The Pre-Wager Tax Details

Operators will be taxed 25 cents per online wager for the first 20 million bets each year, and 50 cents per wager if the yearly tally exceeds that amount [3][4][5]. It's worth noting that this tax is imposed regardless of the size of the wager, so a $1 bet will incur the same tax as a $1,000 bet. With the budget passing in both chambers and Gov. JB Pritzker expected to sign it, the tax will take effect from July 1.

Expect these Possible Outcomes

1. Higher Operational Costs:The new tax will mean additional expenses for major operators, potentially amounting to millions of dollars. Analysts estimate that FanDuel and DraftKings, the only operators likely to exceed the 20 million wager threshold, could collectively face around $80 million more in costs in 2026 [3][4].

2. Market Reaction:Stock prices of major sports betting companies, including DraftKings, FanDuel, MGM, and Rush Street Interactive, have dropped since the announcement, with DraftKings stock experiencing a decline of over 7% [4]. The industry has also expressed strong opposition to the measure, labeling it a "crippling tax" and hinting at legal challenges [4][2].

3. Reduced Promotions and Marketing:Analysts predict operators will decrease promotional events and marketing expenses in Illinois to handle the new tax burden [4]. This could lead to fewer bonuses and incentives for bettors, possibly affecting customer acquisition and retention.

4. Risk to the Legal Market:Industry advocates caution that higher taxes could drive bettors toward unregulated or illegal markets, especially if operators pass on costs to customers [2][3]. There are concerns that legal sportsbooks might lose competitiveness compared to offshore or black-market options if they can't compete on pricing.

In a nutshell, the per-wager tax in Illinois is poised to significantly increase costs for sports betting operators, threaten profitability, and prompt industry scrutiny, with possible adjustments in marketing strategies [3][4][2]. The long-term health and competitive edge of the legal market are questionable if operators pass costs to consumers or if bettors turn to alternatives outside the regulated system.

| Impact | Description ||----------------------|----------------------------------------------------------------------|| Higher Operational Costs | Increased expenses totaling millions for major operators in 2026 || Reduced Profitability | Cuts into adjusted EBITDA for sports betting operators || Stock Market Drop | DraftKings, FanDuel, MGM, and Rush Street Interactive stock prices decreased || Promotional Cutbacks | Operators may scale back on promotions to offset the new tax burden || Risk to Legal Market Share| Concerns about competition from illegal and offshore operators |

  1. The per-wager tax stipulated in the new sports betting legislation could lead to higher operational costs for major sports betting operators, with FanDuel and DraftKings potentially facing an additional $80 million in costs in 2026.
  2. The recent attempt to impose a high per-wager tax on sports-betting operators might have negative effects on the sports-betting market, potentially causing operators to reduce promotions and marketing expenses, and potentially driving bettors towards unregulated or illegal markets.

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