Illinois Betting Tax to Increase For Sportsbooks
State's Unique Progressive Betting Tax to Go Into Effect
The Illinois Legislature has signed off on the progressive sports betting tax, which taxes sportsbooks different amounts based on the revenue they bring in.
The move was made over objections from the Sports Betting Alliance, which represents DraftKings, FanFuel, BetMGM and other sportsbooks. IllinoisGov. JB Pritzker pointed out the maximum tax rate of 40% is less than the sportsbooks pay in New York. The Illinois betting tax increase is awaiting his signature to take effect.
The sportsbooks have known about the possibility of an Illinois betting tax increase for a number of months. When Pritzker unveiled his initial state budget in February it called for an increase from the current 15% to 35%.
The Illinois Legislature did him one better, raising the maximum tax on the highest earners to 40%. The original bill passed by the House, HB 4951, did not have the progressive betting tax.
That was added by the Senate and sent back to the House, which approved the modified version. Supporters of the tax increase say the move will generate an additional $200 million for the General Revenue Fund.
An additional 1% tax increase on video gaming machines should bring in another $35 million. Moreover, proponents say the increase in revenue was needed to balance the state’s budget for the year.
Sportsbooks ‘Disappointed’ in Decision
The Sports Betting Alliance said the Illinois betting tax increase was an “extremely disappointing decision that will cause real harm.” SBA PresidentJeremy Kudon posted on social media, “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.”
While Kudon made mention of sportsbooks needing to “reevaluate their level of investment and participation in the state,” Pritzker and the Illinois Legislature weren’t buying it.
He said it was a matter of the sportsbooks paying their “fair share” of taxes to the state.
Illinois Tax Increases Substantial
You knew the sports wagering giants were going to be upset. DraftKings’ taxes in 2023 would have been $105.7 million instead of the$46.8 million it paid under the previous plan.
FanDuel would have paid the state $144.4 million instead of the $61.3 million it did pay. Consequently, the increase represents a significant boost in state revenue.
Since the minimum tax under the new tax rate has been increased to 20%, all of the state’s sportsbooks will be paying more, although not all will be at the 40% rate.
“I don’t worry so much on the tax increases on gaming, you know, who’s going to cry crocodile tears,” says former Ohio governor @JohnKasich on Illinois voting to raise taxes on sports betting. “What you wonder about is what the state is going to do with the extra revenue.” pic.twitter.com/BiL04PLIzF
— Last Call (@LastCallCNBC) May 28, 2024
Only those sportsbooks reporting revenue in excess of $200 million will pay the maximum. Smaller sportsbooks will pay anywhere from 20 to 35% with separate tax assessments for retail sportsbooks and online sportsbooks.
Sportsbooks offering retail and online betting will pay two different amounts.
The retail tax rate will be less, since the majority of Illinois bettors prefer to play their expert picks online.
It’s unlikely the Illinois betting tax increase is noticeable to Illinois sports bettors. Although the sportsbooks aren’t happy and are complaining, they are still making a lot of money in the state.
It makes no sense to leave Illinois, as bettors will simply move to another sportsbook operating in the state. There are plenty of sportsbooks that will be offering the latest scores and odds on all of the games.
For Illinois sports betting news, odds, analysis, and more, visit Point Spreads Sports Magazine.
