Illinois Governor Calls to Hike State Sports-Betting Tax
Illinois Sports Betting Tax Increase: Proposal Seeks Push to 35%
Gov. JB Pritzker is pushing a substantial Illinois sports betting tax increase.
As part of his $52.7 billion budget for Fiscal Year 2025, Pritzker on Wednesday called to increase the state sports betting tax rate to 35%. That is more than double the current rate of 15%.
Pritzker’s FY 2025 budget, released in conjunction with his speech to state legislators, indicated a projected tax revenue increase of $200 million at a 35% rate. Though Pritzker did not directly refer to this proposal during his address, a spokesperson for the Democrat told SportsHandle that the “increase will help fund Governor Pritzker’s commitment to supporting working families while putting us in line with rates from many other states.”
If passed, the tax increase would start on July 1, the start of the new fiscal year. The 35% rate would rank among the highest in the country where sports betting is not regulated by a lottery. The increase would compare to the 36% tax rate on mobile betting revenue in Pennsylvania. Notably, operators in Pennsylvania can deduct promotional credits before paying taxes on adjusted gross revenue.
Illinois’ hike would still leave it behind states like New York, which has a tax rate of 51%.
The first 15% of the tax would be directed toward the state’s infrastructure Capital Projects Fund, with the other 20% flowing directly to the state to help with its budget shortfall.
Busy Landscape
Eight mobile sportsbooks and 11 brick-and-mortar sportsbooks currently operate in Illinois, including industry leaders DraftKings and FanDuel. Illinois sportsbooks reported a record $128.4 million in revenue in December, and total earnings for 2023 topped $1 billion. Illinois is one of the country’s top three markets in terms of handle, as only New York and New Jersey performed better in 2023.
Illinois also collected $150.3 million in taxes from sports betting, an increase of nearly $32 million from 2022. The adjusted gross revenue marked a 26.1% increase.
If enacted, there’s no question an Illinois sports betting tax increase would cut into the profits of DraftKings and FanDuel while substantially hurting smaller operators like BetRivers.
Speeding Up the Process
Pritzker legalized in-person sports betting in Illinois on March 9, 2020, with online gambling getting the green light three months later. DraftKings, FanDuel and Caesars were among the first operators to receive licensing in the state, alongside the likes of BetMGM, BetRivers and ESPN BET.
Initially, bettors were required by the state to register in-person at a retail betting site before they could wager online. However, Pritzker later waived that requirement given the restrictions around social distancing during the COVID-19 pandemic. Now, Illinois bettors can sign up wherever they choose.
Contrary to several states, betting on in-state colleges is legal in Illinois. However, bettors are only allowed to do so in-person. In that market, app betting remains prohibited.
Online sports betting is now legal in 29 U.S. states plus Washington, D.C. That doesn’t include North Carolina, which is slated to launch next month. A handful of other states such as Alabama have explored joining the industry.
Stay tuned for more updates on the proposed Illinois sports betting tax increase.
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