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Illinois has sanctioned a substantial tax hike targeting sports betting operators, aimed at bolstering state tax revenues amidst projected expenditures exceeding $53.1 billion in the upcoming fiscal year.
Members of the Illinois General Assembly have endorsed Governor J.B. Pritzker’s proposed $52.7 billion budget, adding an additional $400 million in expenditure, necessitating increased revenue from various sources, notably sports betting.
Originally proposed by Governor J.B. Pritzker to set a flat tax rate of 35% on sports wagering gross revenues, lawmakers have instead introduced a progressive tax structure under an amendment to HB4951. The new structure will levy taxes ranging from 20% to 40%, depending on the annual adjusted gross revenues (AGR) of sportsbooks.
The detailed tax rates are as follows:
20% for AGR up to $30 million annually
25% for AGR between $30 million and $50 million annually
30% for AGR between $50 million and $100 million annually
35% for AGR between $100 million and $200 million annually
40% for AGR exceeding $200 million annually
These increased tax rates are projected to generate an additional $200 million in revenue for the state, positioning Illinois with the fourth highest sports betting tax rates in the United States.
Concerns were raised by Illinois sports betting operators regarding potential negative impacts on bettors, suggesting poorer odds. However, experiences in other states with higher tax rates, such as New York, New Hampshire, and Rhode Island, have not borne out these concerns.
Following the passage of the new state budget, stocks of major sports-betting companies like DraftKings (DKNG) and Flutter Entertainment (FLUT), parent company of FanDuel, saw declines on Tuesday.
The tax hike represents Illinois’ proactive measure to shore up state finances amid significant fiscal demands anticipated in the near future.
By fLEXI tEAM
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