Sports Betting Operator Fight Tax Hike Proposal in Illinois

The stage is set for a showdown in the Land of Lincoln between the Governor and sports betting operators.

The Sports Betting Alliance (SBA), which includes BetMGM, DraftKings, FanDuel, and Fanatics, recently sent a mass email to Illinois residents opposing a major tax hike on sports betting operators. Governor J.B. Pritzker has proposed the hike, which would raise the tax rate for sports betting operators from 15% to 35%. 

The proposal is estimated to raise tax revenue from sports betting by $200 million. However, the Alliance has pushed back by going directly to Illinois residents. Their mass e-mail says the hike would lead to worse odds being offered by sportsbooks and far fewer promotions. They also point out that a 35% tax rate would be far above the rest of their neighbors in the US.

While this hike would more than double the state’s current tax rate, it will still align with some of the nation’s other largest markets. New York currently has the highest rate at a whopping 51%. 

If the tax hike is passed as part of the 2025 Illinois Fiscal Budget, it will take effect on July 1.

Tax Battle Could Have National Impact

The SBA has good reason to oppose Illinois' proposed tax hike. 

With sports betting legal in the US for a few years now, many states have been revisiting their tax rates for operators. Many have already made small hikes, but none are as aggressive as the one being proposed in the Land of Lincoln. If they do decide to make the hike official, it will likely lead many other states to follow suit.

Some believe the SBA’s prediction of watered-down odds and promos are unlikely in a fiercely competitive sports betting market. While smaller operators will likely be squeezed out, the top sportsbooks will still be competing against each other for market share.

Others believe that the SBA will stand firm if the hike is passed, leading to bettors paying the price for the increase. That would send a message to states that there is a limit to how much they can squeeze out of operator revenue and cost Illinois legislatures a vote ahead of the November election.