Anyone who places a bet on sports in Illinois could find tougher odds once the new Illinois sports betting tax rate takes effect on July 1.
Gov. JB Pritzker approved a sports betting tax hike as part of the state’s $51.3 billion 2025 fiscal year budget. Illinois sports betting is currently taxed at 15%. The new state budget includes a progressive — and higher — tax rate for event wagering:
- 25% for operators that make less than $50 million in revenue
- 30% for sportsbooks that exceed $50 million but stay under $100 million in revenue
- 35% from $100 million to $200 million
- 40% for operators who clear more than $200 million in revenue.
Pritzker signed the budget package and tax increase on June 5, calling it “another demonstration of fiscal responsibility.”
DraftKings, FanDuel Opposed Illinois Tax Hike
DraftKings, FanDuel, BetMGM, and Fanatics used a cooperative lobbying effort called the Sports Betting Alliance to discourage the Illinois tax increase in HB 4951. Sports Betting Alliance President Jeremy Kudon called the new tax rate “an extremely disappointing decision that will cause real harm.”
Kudon also said Illinois will have the second-highest tax rate once the new budget begins in July. The high-end 40% tax rate “counterproductively penalizes sports betting operators who invested millions into the local economy and created jobs in the state,” he added.
Statement on sports betting tax hike advancing out of the Illinois Senate tonight: pic.twitter.com/8x2ZuYXEk0
— Sports Betting Alliance (@SBAllianceUS) May 27, 2024
What the Illinois Sports Betting Tax Rate Increase Means for Bettors
FanDuel President Christian Genetski and DraftKings CEO Jason Robins faced the challenges of a high tax rate state before. On Jan. 31, 2023, they tried to persuade New York lawmakers to lower its nation-high 51% online sports betting tax rate.
Genetski told the New Yorkers that operators feel pressure to “make the numbers work.” True to their word, New York sees fewer sports betting bonuses and bonus bet offers. The New York sportsbooks also negatively adjust pricing — how much it costs to place a bet — to offset the higher tax rate.
“New York customers would receive worse odds than DraftKings offers in other states — and that you can find in the illegal market,” Robins told NY lawmakers. “Many customers are very sensitive to this, naturally.”
The DraftKings and FanDuel testimony didn’t inspire New York legislators to change the tax rate. Pritzker isn’t worried about an exodus in Illinois, either. At the bill signing, he said of FanDuel and DraftKings:
“They’re not leaving New York, they’re not leaving other states. We’re the third-largest sports betting market for sports betting companies, and we had a much lower tax rate than many of the largest of those markets.”
Illinois bettors risked about $1.26 billion in March, the state’s most recent reporting month. The pace generated about $16 million in taxes for the state.
Since March 2020, when Illinois sports betting began, operators have earned $2.8 billion in revenue from $33.9 billion in bets. The transactions created about $445 million in taxes for the state.
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