Illinois Sportsbooks Unlikely to Leave Despite Tax Hike
Governor J.B. Pritzker Remains Confident About Retaining Fanduel and DraftKings
Too Much Taxes
Governor J.B. Pritzker of Illinois is confident that major sports betting companies like FanDuel and DraftKings won’t abandon the state despite the recent increase in sports wagering taxes.
This belief comes despite gambling news reports of threats from these companies to reduce operations or leave the state altogether if the tax hike is implemented.
However, both the Governor and industry experts argue that these threats are more likely bluffs, as Illinois represents a lucrative market that companies are unlikely to forsake.
The New Tax Structure
Illinois legislators recently passed a budget that includes a graduated tax system for sports betting revenue.
Previously, sports betting companies were subject to a flat 15% tax rate. Under the new system, taxes will start at 20% for revenue up to $30 million and can go as high as 40% for revenue exceeding $200 million.
Let the record show: Illinois is on our way to a Rainy Day Fund of over $2.3 billion, received 9 credit upgrades, increased our pension-funded ratio, paid off our overdue bill backlog, and eliminated nearly all our short-term debt, all while surpassing a trillion-dollar GDP.
— Governor JB Pritzker (@GovPritzker) June 2, 2024
FanDuel and DraftKings, the two largest players in Illinois’ sports betting market, will be the most affected by this tax hike.
Last year, these companies generated substantial revenue from Illinois bettors, with FanDuel making nearly $411 million and DraftKings $319 million from online betting activity.
Under the new tax system, their contributions to state taxes would have been considerably higher.
The Argument for Fair Share
Governor Pritzker has justified the tax hike by emphasizing that these companies need to pay their fair share. Moreover, he believes that the increased revenue from these taxes will benefit the state significantly without driving the companies away.
Pritzker’s administration estimates that the new tax structure will generate slightly more than $200 million. Furthermore, this aligns Illinois with other large markets that have similar tax rates.
In response to the tax hike, Jeremy Kudon, president of the Sports Betting Alliance, argued that the new rates would penalize operators who have invested heavily in the state and could force them to reconsider their presence in Illinois.
Despite these concerns, Pritzker and several experts remain confident that the lucrative nature of the Illinois market will keep these companies from leaving.
For Illinois sports betting news, odds, analysis, and more, visit Point Spreads Sports Magazine.
