Illinois Sports Betting Tax Rate Increases to Up to 40%

legalized in 2019, are now facing significantly higher tax rates. On Monday, the state introduced a new progressive tax rate for licensed sportsbooks, ranging from 20% to 40% based on adjusted gross revenues. This change positions Illinois as having the second-highest sports betting tax rate in the United States.

Significant Revenue Impact Expected

The new tax rate is anticipated to generate over $200 million in additional revenue for Illinois. In 2023, the state collected just over $1.5 billion from online sports betting operations and casinos. In comparison, the Illinois state lottery, which has been operational since 1974, brought in approximately $2.32 billion in revenue in the same year.

According to the American Gaming Association, sports wagering revenue across the United States increased by 22% to $3.33 billion in the first quarter of 2024. This growth has garnered significant attention from state governments nationwide. For instance, New York has implemented a maximum tax rate of 51%, and New Jersey is contemplating doubling its rate to 30%. Although a proposal to raise Massachusetts’ tax rate from 20% to 51% failed in May, it highlights the trend of states exploring higher taxes on sports betting.

Nationwide Sports Betting Expansion

The expansion of sports betting in the U.S. followed a 2018 U.S. Supreme Court decision overturning a federal law banning sports gambling. Before this ruling, Nevada was the only state where sports betting was legal. According to the American Gaming Association, 30 states and Washington D.C. currently allow online sportsbooks.

For investors, the sports betting market has proven lucrative. FanDuel’s owner, Flutter Entertainment, leads the market with a valuation exceeding $33 billion, while DraftKings holds a market value of about $20 billion. In 2023, DraftKings’ stock price more than tripled as its revenue surged by over 60%.

Although the company is projected to incur a slight loss in 2024, it is expected to post an annual profit in 2025 as revenue growth continues. Additionally, other online sports gambling ventures have bolstered the earnings of broader gambling-focused companies such as MGM Resorts, which operates BetMGM, and Penn Entertainment, which collaborates with Disney on ESPN Bet.

This report was created with contributions from The Associated Press.

Source:

Illinois’ new sports betting tax rate takes effect; state now has 2nd-highest rate, audacy.com, June 1, 2024.