Illinois Sports Betting Tax Rise for Operators Proposed by Governor

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Illinois Governor J.B Pritzker (pictured) presented his 2025 budget to the public this week. In it, he proposed more than doubling the tax rate for Illinois sports betting operators.

The $52.7 billion budget would set the sports wagering tax rate at 35%, compared to the current 15%. Pritzker believes this hike could bring in $100 million extra in taxes for the state.

The move would put it in third place for the highest tax rate on sportsbooks among U.S. markets. Only New York sports betting operators (50%) and those in Pennsylvania (36%) pay more.

Illinois lawmakers in the House and Senate still have to vote their approval for the proposed budget over the coming legislative session. The budget deadline for implementation is the end of the 2024 fiscal year on June 1, which is when any agreed tax rises will take effect.

If he is successful, Pritzker will be the second state governor to hike sports betting operator taxes in the last 12 months. In July 2023, Ohio sports betting providers had their taxes doubled from 10% to 20%.

“I wish we had big surpluses to work with this year to take on every one of the very real challenges we face,” Pritzker said, speaking on Wednesday in Springfield, Illinois.

“It’s important to note that while this budget is tight this year, our fiscal house is in order, and we are able to keep our commitments to the people of Illinois.”

Big Market

Illinois is fast-becoming one of the bigger gambling states in the country.

Illinois sports betting brought in $1 billion in revenues in 2023, putting it in third place behind New York and New Jersey sports betting.

Some 96% of the action comes in from eight mobile operators. The last to launch was Nevada-based Circa Sports in late 2023.

There is a solid selection of retail sportsbooks in Illinois, numbering 11 in total. There are also 14 casinos in Illinois, meaning most also host retail sports betting facilities.

Shoes to Fill

There are, however, currently three online sports betting licenses open for applications, for which the Illinois Gaming Board has struggled to find suitable and interested candidates.

Hiking the tax rate to more than double will not do that process any good, especially with a costly $20 million license fee.

That might not be much to DraftKings, who recently announced a $43 million yearly loss for 2023, only to drop $750 million on expanding into the lottery space the same week. But for a smaller online sportsbook looking to grow, that could be a prohibitive cost.

Two operators dropped out of the license application process last year. Illinois-based J&J LLC and British operator Betway were both in line for a license, but decided against it.

The tax hikes in Illinois will not be only on sports betting operators, if Pritzker’s budget passes as it is now.

As well as the $100 million in extra tax revenue from the sports betting rate change, Pritzker predicts $800 million from increased taxes on other sectors of the economy. He plans to get rid of a corporate deduction for companies with $500 million-plus in savings that was designed to promote business investment – but he argues the money would be better paid as tax.

On the other hand, he has also suggested repealing the 1% sales tax on groceries, which only a handful of states still retain.

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