A coalition of major commercial operators is advocating against a proposed tax increase on Illinois sports betting after Gov. JB Pritzker suggested raising the rate from 15% to 35%.
Representing BetMGM, DraftKings, Fanatics, and FanDuel, the Sports Betting Alliance (SBA) has been urging consumers to engage with state lawmakers to oppose the potential tax hike. According to a spokesperson for the SBA, around 25,000 emails have already been sent to the Illinois legislature and Gov. Pritzker, LSR reported.
The SBA’s website outlines three key points on why this issue is significant: higher taxes could lead to less favorable odds for players, reduced access to promotions and bonuses for customers, and a potential increase in illegal offshore sports betting, which is not subject to 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 note on the website said.
Additionally, the SBA highlights concerns that “a 133% tax increase” would result in less funding available for operators to invest in technology upgrades, responsible gaming initiatives, and customer support services.
“SBA companies entered 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 was quoted as saying in the report.
“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,” he added.
This isn’t the first time that major commercial operators have expressed discontent over high tax rates. DraftKings CEO Jason Robins previously warned New York legislators about the possibility of offering less favorable odds in the absence of tax reductions. Despite objections, operators in New York had agreed to a 51% tax rate prior to the state’s launch.
Elsewhere, New Jersey is considering raising its sports betting tax to 30% from 14.25%, while Ohio recently signed into law an increase in the tax rate from 10% to 20% for the 2024-25 fiscal year.