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Illinois Betting Tax Increase May Inspire Similar Moves in Other States
Illinois Senate Approves FY2025 Budget with Sports Betting Tax Increase
May 28, 2024 Marija D
In a significant development for the gambling industry, the Illinois Senate recently approved the FY2025 budget, which includes a notable tax hike specifically targeting sports betting operators in the state. Let’s delve into the details of this decision and its potential impact.
Background and Context
The decision was made late on Sunday, May 26, when Illinois senators voted to the budget for the fiscal year 2025. This budget not only outlines financial allocations for various sectors but also introduces changes to the taxation structure for sports betting operators.
The proposed tax hike is expected to have a significant impact, particularly on the state’s largest sports betting operators. The tax rate for the most successful operators is set to nearly triple under this new budget, making Illinois one of the most expensive states for wagering operators to conduct business.
The tax increase is structured progressively, meaning that operators will face varying tax rates based on their adjusted gross revenue (AGR). The highest tax rate reaches up to 40% for operators with the highest AGR, while the lowest rate starts at 20% for those with lower income.
Comparison with other states
This move positions Illinois as one of the states with the highest tax rates on sports betting operators, second only to New York. It’s worth noting that New York has a competitive market, similar to Illinois, which makes the tax hike even more significant for operators in these states.
The vehicle for implementing this tax hike is House Bill 4951 (HB 4951), which has undergone several revisions and debates before being ed by the Senate. The bill will now return to the House for concurrence, where further discussions and potential amendments may take place.
The Sports Betting Alliance (SBA) has expressed disappointment and concern regarding this tax hike. They argue that such a significant increase in tax rates could lead to adverse effects, including reduced investment in the state, fewer promotional offers for customers, and potentially lower odds for bettors.
One of the key concerns raised by industry stakeholders is the potential impact on the overall gambling experience for customers. Higher tax rates could result in reduced profitability for operators, leading to cutbacks in various areas such as customer rewards, innovative features, and overall service quality.
Economic Considerations
Apart from the direct impact on operators and customers, there are broader economic considerations at play. The success of the gambling industry in Illinois contributes significantly to the state’s economy through job creation, tax revenue b, and overall economic activity. Any changes that negatively affect the industry could have ripple effects on the state’s financial health.
The approval of the FY2025 budget with a sports betting tax increase marks a significant development in Illinois’ gambling landscape. As the legislation progresses through the final stages of approval and potential amendments, stakeholders will closely monitor its impact on operators, customers, and the broader economy. The outcome of these deliberations will shape the future of sports betting in Illinois and serve as a benchmark for other states navigating similar challenges in the industry.
According to the source: “This tax hike means worse products, worse promotions and, inevitably, worse odds for Illinois customers – not to mention provide a massive leg up to the dangerous, unregulated illegal offshore sportsbooks who pay no taxes and adhere to none of Illinois’ sports betting regulations.”
Source:
”Illinois senate es “penal”, progressive sports betting tax”, iGamingbusiness. Mat 27, 2024.
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The decision by the Illinois Senate to approve the FY2025 budget with a tax hike for sports betting operators is sure to have a ripple effect throughout the industry. It’ll be interesting to see how this impacts both operators and bettors in the coming months.