On Sunday (26 May), Illinois’ FY2025 budget was approved by senators. This included the tax rate for gambling operators rising from the current 15%. The current rate has been in place since sports betting went live in the state in June 2021.
The house approved the budget on Wednesday with a vote of 60-47. Governor J.B Pritzker, who initially sought a 35% rate, will now decide whether to sign the tax rise into law. If Pritzker approves, the rate will come into effect from 1 July.
The new rate will be 20% on adjusted gaming revenue (AGR) up to $30m (£23.6m/€27.7m), while an operator with AGR between $30m and $50m will pay 25% in tax. An AGR between $50m and $100m will necessitate 30% of revenue to be paid in tax, with a 35% tax on revenues up to $200m.
The rise will prove especially punitive for Illinois’ most prominent operators, with a 40% rate on AGR exceeding $200m. The 40% figure would be the second highest in the US behind New York’s 51%.
Tax rise approved in early hours
The approval of the tax rise was far from a foregone conclusion. However, it eventually passed at around 04:30am today.
State-house reporter Hannah Meisel observed the vote and noted “switching back and forth” before the house eventually concurred.
Republican representative Patrick Windhorst noted the time of the vote, stating: “I think it should be clear to everyone in this state what this (Democratic) supermajority is willing to do to ram a tax increase down the throats of the people of Illinois at 04:30 in the morning.”
Industry opposition in Illinois
The tax hike has predictably been met with fierce industry opposition.
The Sports Betting Alliance (SBA) represents Fanatics Sportsbook, FanDuel, DraftKings and BetMGM. Following the weekend passing of the FY2025 budget, the SBA warned of the impact tax rises could have on the state.
“This tax hike doesn’t just threaten the legal, regulated sports betting market – it will have devastating effects for operators’ in-state partners, including the most vulnerable downstate casinos, who rely on sports betting revenue to create jobs and invest in communities,” SBA president Jeremy Kudon said on X.
Even prior to the house approving the tax hike, leading Illinois operators were feeling the effects.
The stock prices of both DraftKings and Flutter Entertainment – owner of FanDuel Group – declined earlier this week in response to the tax proposals.
When the market opened on Tuesday (28 May), Flutter’s stock dropped 3.7% to $196.64 from its closing price of $204.11 prior to the weekend. Flutter’s stock closed on Tuesday at $188.33, 7.7% lower than the closing price ahead of the weekend.
DraftKings, meanwhile, saw its stock drop 12% to $35.88 from the pre-weekend closing price of $40.75.
Original article: https://igamingbusiness.com/legal-compliance/regulation/illinois-approves-gambling-tax-hike/
