Illinois has approved a major tax hike for sports betting operators as the state seeks to increase tax revenues for public spending which is expected to exceed $53.1 billion in the next fiscal year.
According to reports, members of the Illinois General Assembly have returned Gov. J.B. Pritzker’s record $52.7 billion budget proposal with an additional $400 million in expenditure.
As a result, the state needs to generate additional revenues from a variety of sources with sports betting being one of the biggest contributors.
Sports Betting Tax Increase
Gov. J.B. Pritzker had originally sought to increase the sports wagering tax rate from 15% of gross revenues to a flat rate of 35%. However, lawmakers have set out a new progressive tax structure that will see rates ranging from 20% to 40%. The rate charged depends on the sportsbook’s gross revenues.
The tax was passed as an amendment to HB4951, an unrelated bill.
The rates are as follows:
- 20% – Annual AGR up to $30 million
- 25% – Annual AGR $30 million to $50 million
- 30% – Annual AGR $50 million to $100 million
- 35% – Annual AGR $100 million to $200 million
- 40% – Annual AGR over $200 million
The increased tax rates are expected to generate an additional $200 million in revenues for the state.
Illinois now has the fourth highest sports betting tax rates in the United States.
When the tax rate increase was originally proposed, Illinois sports betting operators suggested that the increase would result in poorer odds for sports bettors. However, this has not been the case in states with higher rates such as New York, New Hampshire, and Rhode Island.
Stocks in sports-betting companies like DraftKings (DKNG) and FanDuel’s parent Flutter Entertainment (FLUT) slid on Tuesday following passage of the new state budget.
An experienced iGaming commentator and analyst based in New York City – Jenny reports on regulation and gambling industry news and events.
Illinois Set to Increase Tax Rate on Sports Betting
In a move that has sparked controversy among sports betting enthusiasts and industry experts, Illinois is set to increase the tax rate on sports betting. The state currently imposes a tax rate of 15% on sports betting revenue, but lawmakers have approved a bill that will raise the tax rate to 17%.
The decision to increase the tax rate comes as Illinois looks to generate more revenue from the rapidly growing sports betting industry. With more and more states legalizing sports betting, competition is fierce, and Illinois is looking to stay competitive by increasing its tax rate.
While some argue that the increase in the tax rate will deter sports bettors and drive them to illegal, unregulated markets, others believe that the increase is necessary to fund important programs and services in the state. Proponents of the tax increase point out that sports betting operators are still making a profit, even with the higher tax rate.
Opponents of the tax increase argue that it will hurt the industry and ultimately lead to less revenue for the state. They believe that a lower tax rate would attract more sports bettors and ultimately generate more revenue for Illinois.
Overall, the increase in the tax rate on sports betting in Illinois is a contentious issue that has divided opinions. It remains to be seen how the increase will impact the industry and whether it will ultimately benefit the state in the long run.
