A coalition of major commercial operators is making its case for why there should not be a tax hike on Illinois sports betting.
Gov. JB Pritzker has suggested raising the Illinois sports betting tax rate to 35% from 15%.
The Sports Betting Alliance, which represents BetMGM, DraftKings, Fanatics and FanDuel, has been encouraging consumers to reach out to state lawmakers to help stop the potential hike.
A spokesperson for the SBA told LSR this week that a combined 25,000 emails have already been sent to the Illinois legislature and Gov. Pritzker.
SBA’s take on Illinois sports betting tax
The SBA’s website lists three main bullet points for why this issue matters:
- More taxes mean worse odds for players
- Customers will have access to fewer promotions and bonuses
- A tax hike will increase illegal offshore sports betting (they pay 0% taxes)
“Illinois legislators have until the end of May to vote on the proposed tax increase. This is a crucial time to make your voice heard,” the site reads.
More tax hike concerns for coalition
The SBA also notes that a “133% tax increase” will mean less money for operators to invest in technology upgrades, responsible gaming efforts and customer support teams.
“SBA companies entered in Illinois with the understanding they would be operating under a 15 percent tax rate. All of them are currently operating in the red, but are still investing in the state based off long term potential under a 15 percent tax rate,” SBA spokesperson Nathan Click told LSR.
“Doubling the tax rate massively, that changes the calculus — and basically makes these investments exceedingly harder to recoup — much less turn a profit. The state taxes promos, so operators’ effective tax rate is actually between 30-60 percent.”
Robins complained about NY tax rate
This is not the first time major commercial operators have grumbled about high tax rates.
In January 2023, DraftKings CEO Jason Robins told New York legislators that without a reduction, the operator might be “forced” to offer worse odds in the Empire State.
Prior to state launch, the nine licensed online sports betting operators in New York negotiated and agreed to the 51% tax rate. Robins claimed they had “no choice” but to agree.
NJ considering sports betting tax hike
New Jersey is considering a tax hike on sports betting to 30% from 14.25%.
In Ohio, Gov. Mike DeWine signed into law an increase on the sports betting tax rate to 20% from 10% for the 2024-25 fiscal year.
“Legalizing sports betting was not a license to make other companies rich,” Rich Azzopardi, former aide to Gov. Andrew Cuomo, told LSR.
Azzopardi later said: “… It was not an argument about whether 51% was feasible. It was an argument about whether these guys got a jet ski or a boat for Christmas.”
