Illinois Lawmakers Struggle to Reach Agreement on Betting Tax Increase
If the Taxes Are Approved, This Will Significantly Halt the Growth of the Sports Betting Industry
Illinois’ Tax Increase
Illinois legislators have been unable to reach a consensus on a proposed increase in betting taxes, prompting them to extend their deadline to find a resolution.
The potential tax hike has sparked significant controversy, betting news reports that major sports betting operators are threatening to exit the state if the plan goes through.
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Expert Pick: Subscribe below to get our Premium Insights!This tax increase could destabilize the betting market in Illinois, making it less competitive and posing challenges for operators.
What Would It Look Like?
The latest budget proposal discussed on May 25 includes a graduated wagering tax structure, which would impose different tax rates based on an operator’s adjusted gaming revenue (AGR).
The proposed breakdown is as follows:
- 20% tax on AGR up to $30 million
- 25% tax on AGR from $30 million to $50 million
- 30% tax on AGR from $50 million to $100 million
- 35% tax on AGR from $100 million to $200 million
- 40% tax on AGR over $200 million
This structure would see top operators, like DraftKings and FanDuel, falling into the 40% tax category. This significant increase from the current 15% tax rate would nearly triple their tax burden, making Illinois one of the most expensive markets for sports betting operators, second only to New York, which has a 51% tax rate.
Latest revenue bill: IL sports betting tax would be structured at a graduated rate ranging from 20% to 40% depending on AGR (1st screenshot).
Revenues would be shared between capital and general revenue fund (2nd screenshot).
Also, an extra 1% tax on video gaming terminals (3rd) pic.twitter.com/aUGSD1XwWk— Hannah Meisel (@hannahmeisel) May 25, 2024
Operators Are Not Happy
The proposed tax hike has drawn strong reactions from betting operators. An industry source highlighted the counterproductive nature of the plan, arguing that it would punish the operators who invest the most and create the most jobs in the state.
“Policymakers should be incentivizing operators to create jobs and invest resources in building the Illinois market. This does just the opposite,” the source said.
Governor JB Pritzker initially proposed a flat tax rate that would more than double the current tax rate. However, the graduated tax structure now on the table has operators lobbying against the increase, warning that it could drive them out of the state.
Extended Deadline and Legislative Session
Illinois lawmakers were scheduled to adjourn at the end of Friday, May 24, but agreed to extend the session to approve a budget.
While the legislature technically has until June 30 to pass a budget, it typically adjourns well before that deadline.
If the budget is approved after May 31, the number of votes needed for approval increases, adding further pressure to reach an agreement soon.
House Speaker Emanuel Welch expressed optimism that a final budget agreement is close, stating, “The House and Senate are very close to an agreement on a final budget. Procedurally, the earliest an agreement could pass both chambers is next week. To let members and staff rest and spend time with family, we are adjourning for the holiday weekend and will return to complete this work.”
If the tax increase goes through, Illinois would become one of the most expensive states for sports betting operators, potentially driving out key players and stifling market growth.
The outcome of this legislative battle will have a lasting impact on the future of sports betting and online gambling in Illinois, determining whether the state can maintain a competitive and attractive market for operators and consumers alike.
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Author: Sin City Sniper
Author: Sin City SniperBusting bookmakers and taking their money is his greatest joy in life. He’s been around the block more than once, knows the players both on and off the field of battle, and uses his experience to serve the bookies a heaping plate of humble pie washed down by a warm glass of their salty tears. You can find him in any number of Vegas books, sniping weak lines and getting paid to do it.
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