New Illinois Sports Betting Tax Rate to Take Effect on July 1
Governor JB Pritzker signed the Illinois budget for Fiscal Year 2025 this week. Also, it included the new Illinois sports betting tax rate for licensed sportsbooks, to the dismay of operators. The $53.1 billion budget included the first progressive tax rate for sportsbooks in the US. Sports betting companies will pay 20 to 40 percent of their adjusted gross revenues.
The progressive tax rate, effective July 1st, is not just a financial burden. It is expected to generate nearly $200 million in additional state revenues, potentially driving growth in the sports betting industry.
According to sportsbook pay per head experts, not all favor the new tax rate. Several industry leaders, including Jeremy Kudon, the Sports Betting Alliance president, have expressed their disapproval. Their concerns about the potential impact on product quality, promotions, and odds for clients in Illinois offer a balanced perspective on the issue.
New Illinois Sports Betting Tax
According to a political news forum, Kudon predicted that sports betting businesses would have to weigh the state’s high taxes against the benefits of opening a location there. When asked about the budget’s revisions to the sports betting tax rate, Pritzker spoke with reporters after signing it, saying he didn’t think operators would leave the state.
Even though New York’s sports betting tax rate is 51%, he said nobody is escaping the state.
For the first time, the nation has a progressive sports betting tax rate. After Pritzker proposed a 35% tax on sports betting in Illinois, up from 15% before, sportsbook operators in the state were understandably upset going into budget season. But from now on, operators might be hit with a charge of up to 40%, depending on their AGR.
According to Governor Pritzker, online sportsbooks must pay their “fair share” into Illinois’ coffers. The governor is firm on the state’s stance. Experts warn against assuming that FanDuel and DraftKings would abandon the lucrative Illinois market because the tax increase threatens their bottom lines.
Progressive Sports Betting Tax Rate
The following revised gross sports betting revenues will determine operators’ tax obligations under the new system:
- 20% – $0 to $30 Million
- 25% – $30 to $50 Million
- 30% – $50 to $100 Million
- 35% – $100 to $200 Million
- 40% – More than $200 Million
Additionally, operators will have to pay two different taxes, one for brick-and-mortar sportsbooks and another for internet sportsbooks, using a sliding scale. Currently, the only two Illinois operators that fall under that top-tier tax system and are obligated to pay a 40% rate are FanDuel and DraftKings. With an adjusted gross revenue of almost $421.3 million, FanDuel outpaced DraftKings, which recorded $349.9 million.
Under the proposed arrangement, BetRivers and Fanatics Sportsbook rates would climb from 15% to 30% and $51.6 million and $81.1 million, respectively. Also, the prices at Caesars, ESPN BET, and BetMGM would increase by 25%.
Heavyweights FanDuel and DraftKings are getting ready for a steep tax spike, with rates skyrocketing to a whopping 40%, up from the previous flat rate of 15%. The outcome of this situation has caused both enterprises to reconsider their activities in the state, which has ignited discussions over the reasonableness of the tax increase.
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