Illinois Progressive Sports Betting Tax Passes In Senate

The Illinois Senate passed a bill Sunday night that includes a sports betting tax hike, which stems from a progressive system based on operator revenue earnings, starting with Fiscal Year 2025 beginning July 1.

Illinois Senate passed HB 4951 in efforts to establish a progressive sports betting tax for operators

HB 4951 passed 37-22 after one vital amendment was added from Saturday’s proposal. Mobile and retail adjusted gross sports betting revenue would be taxed at the same progressive rates. However, they would be taxed as separate entities.

This measure is more likely to affect FanDuel and DraftKings — the state’s two highest-earning licensed mobile operators among the eight. Both sportsbooks typically reach $200 million in adjusted gross revenue (AGR), which triggers the maximum 40% rate.

The first $30 million in AGR would be taxed at 20%, followed by 25% for the next $20 million at 25%. Revenue from $50 million to $100 million would be taxed at 30%; revenue from $100 million to $200 million at 35%; and revenue above $200 million would receive a 40% tax rate.

New York’s 51% tax rate on gross gambling revenue (GGR) is the highest in the nation.

The bill now has to pass the Illinois House in order for the proposal to receive Gov. J.B. Pritzker’s signature. Pritzker signed the gaming expansion bill in June 2019 to legalize sports betting in the Prairie State.

Sports Betting Alliance disapproves of progressive tax bill

Of course, the Sports Betting Alliance (SBA) called the budget an “extremely disappointing decision that will cause real harm.” The proposal almost triples the tax rate for the most successful operators.

Licensed operators have been paying a 15% tax since sports betting first launched in June 2021. Earlier this year, Governor JB Pritzker proposed an increase to 35%. The Senate version of the budget exceeds that percentage. The cheapest tax would be 20% and the highest 40%.

Furthermore, the Senate’s progressive sports wagering tax separates AGR for retail and digital sportsbooks. The cutoffs are the same if an operator provides retail and digital sportsbooks.

Additionally, SBA President Jeremy Kudon posted on X stating the proposed progressive sports betting tax “counterproductively penalizes sports betting operators who invested millions into the local economy and created jobs in the state.

“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.”

Illinois would become the second state with a progressive sports wagering tax. In Arkansas, all casino revenue is taxed at 13% for the first $150 million and 20% for revenue above $150 million.

In fact, Arkansas sportsbooks pay 13% in taxes until the operator exceeds $150 million in total gaming revenue. The tax rate then jumps to 20%.