Illinois Betting Tax Hike May Spur Similar Changes in Other States

Illinois has raised the betting tax, and this might lead other states to do the same.

Illinois has raised the tax rate for sports betting operators from 15% to 40%.

New Tax Structure

The new tax structure is tiered based on adjusted gaming revenue (AGR):

• 20% for AGR under $30m
• 25% for AGR between $30m and $50m
• 30% for AGR between $50m and $100m
• 35% for AGR between $100m and $200m
• 40% for AGR over $200m

Governor JB Pritzker will sign off on this proposal. If approved, it takes effect on July 1.

Potential Contagion Effect

Brendan Bussmann from B Global Consultants is worried. He says this might cause other states to increase betting taxes.

Examples of other states:

• Ohio raised its betting tax from 10% to 20% in 2023
• Massachusetts considered a hike but rejected it
• New Jersey has talked about a hike but it seems unlikely
• Pennsylvania may focus on skill-based games instead

Impact on Illinois Market

The new tax rate affects large companies like DraftKings and FanDuel the most. Their stock prices dropped when the plan was made public.

Higher costs for operators can lead to:

• Fewer promotions
• Reduced offerings
• Worse odds for bettors

Bussmann also warns this may benefit offshore betting operators, as they do not pay taxes. This could push more traffic their way.

Other States to Watch

States yet to legalize betting may also introduce higher taxes from the start. Two important states to watch are:

• California: Possible sports betting on the ballot in 2026 or 2028
• Texas: Unlikely to move on legal gambling before 2027

Minnesota, Georgia, and Missouri are thinking about allowing legal betting, but they have different challenges to overcome.

Developments in Legal iGaming

Some states are looking into legal iGaming. For example:

• Arkansas considered it earlier this year but made no progress
• Maryland didn’t pass it last session despite budget constraints
• Illinois is a candidate but faces other legal and gaming expansions

Illinois is adding video gaming machines in Chicago. Bally’s is constructing a casino in the city center.

Illinois is now an important state in the gaming industry because of these changes.