Illinois sports betting is set for a significant shift. Members of the state House and Senate have approved changes to the IL sports betting tax rate, which could more than double for certain operators.
Assuming its approval by Illinois Gov. J.B. Pritzker, the new sliding scale takes effect with the start of the next fiscal year on July 1. The Illinois sports betting tax rate currently sits at 15%, but will now be anywhere from 20% to 40%.
More on the Illinois sports betting tax rate changes
The first indication a change was coming came in Gov. Pritzker’s initial budget for 2024-25. That accounted for a flat 35% Illinois sports betting tax rate across all operators, regardless of revenue.
Over the past few weeks, that morphed into a new structure that taxes operators based on adjusted gross revenue, or AGR. In short, the more business an operator does in the Prairie State, the higher their tax rate.
Here’s the complete breakdown:
- AGR below $30 million: 20%
- AGR between $30-$50 million: 25%
- AGR between $50-$100 million: 30%
- AGR between $100-$200 million: 35%
- AGR above $200 million: 40%
IL sports betting operators push back
Those at the highest end of that scale will pay the second-highest tax rate in the country. Only NY sports betting, at 51%, carries a higher clip.
FanDuel Sportsbook IL and DraftKings Sportsbook IL are the Illinois sports betting market leaders. While all Illinois sportsbooks are in line to pay more to the state’s coffers, they’re by far the most affected by this change.
Predictably, operators are far from thrilled by these developments. Hannah Meisel of Capitol News Illinois reported a source saying the two biggest operators are considering their options, including a possible withdrawal from the state.
The Sports Betting Alliance, which is comprised of multiple operators, released a scathing statement earlier this week. It reads, in part:
“This tax hike will mean worse products, worse promotions, and inevitably, worse odds for Illinois customers – not to mention provide a massive leg up to dangerous, unregulated and illegal offshore sportsbooks who pay no taxes and adhere to none of Illinois’ sports betting regulations.”
Illinois not alone in raising tax rates
The Illinois sports betting move follows a trend that’s gained steam in multiple states. Ohio sports betting, for instance, doubled its tax rate from 10% to 20%, in another change taking effect with the start of the new fiscal year. New Jersey sports betting could also see a significant tax hike. Lawmakers are considering a bill that would change that figure from 13% to 30%.
Lawmakers also briefly considered a Massachusetts sports betting tax hike earlier this month. A bill would have raised that tax to 40%, but it was unanimously rejected by lawmakers after a fiery speech from bill sponsor Sen. John Keegan.
