Sportsbook operators will soon see their tax dues climb after Gov. JB Pritzker signed the 2025 state budget, which includes a significant Illinois sports betting tax hike.
Pritzker signed the $53.1 billion budget into law Wednesday. The budget includes several measures to increase state revenue, including the Illinois sports betting tax increase that is expected to bring in an additional $200 million annually.
“This budget builds on years of economic momentum that is revitalizing communities up and down the state of Illinois,” Pritzker said. “We are on a trajectory of sustainable long-term growth.”
Illinois sports betting tax jump
Illinois sports betting began in March 2020 and carries a 15% tax on operator revenue. The new tax structure begins July 1 with the new fiscal year.
Heading into the legislative session, Pritzker proposed raising sports betting taxes to help balance the budget. Legislators listened and settled on a tiered system starting at 20% and capping at 40%.
Illinois sports betting tax tiers:
- 20% on the first $30 million in sports betting revenue
- 25% on revenue between $30-$50 million
- 30% on revenue between $50 million and $100 million
- 35% on revenue between $100 million and $200 million
- 40% on revenue above $200 million
Pritzker calls out Illinois sports betting operators
When lawmakers passed the budget last month, reports surfaced that DraftKings and FanDuel threatened to leave the state. Meanwhile, Sports Betting Alliance president Jeremy Kudon said the tax increase would result in worse products, promotions and odds.
During the budget signing, Pritzker said if sportsbooks do not leave New York and its 51% tax rate, they will not leave Illinois.
“They’re not leaving New York, they’re not leaving other states,” he said. “We’re the third-largest sports betting market for sports betting companies, and we had a much lower tax rate than many of the largest of those markets. We’re just bringing ourselves more in line, but at a lower rate.”
How IL sportsbooks are affected
Based on 2023 data, four operators would reach the 30% tax rate. That includes DraftKings and FanDuel, both of which would hit the 40% tier.
FanDuel would have paid 136% more in taxes, from $61.3 million to $144.4 million. DraftKings would have paid 126% more, from $46.8 million to $105.7 million.
BetRivers and Fanatics would fall into the 30% tax level. BetMGM, Caesars and ESPN Bet each hit the 25% level.
Will more states follow Pritzker’s lead?
Illinois will now have the second-highest tax rate in US sports betting, behind New York’s 51%. Illinois’s tax hike comes after Gov. Mike DeWine doubled Ohio’s sports betting tax rate to 20% last summer.
This year, New Jersey legislators introduced a bill to raise the sports betting tax from 14.25% to 30%.
Earlier this year, Massachusetts lawmakers rejected a budget amendment that would have taken its sports betting tax from 20% to 51%.
