Illinois Hikes Sports Betting Tax, National Ripple Effects

• Illinois lawmakers passed a $55.2B budget with a controversial new tax on every legal sports bet placed in the state.
• The measure directly impacts DraftKings and FanDuel and could reshape the economics of legal sports betting.
• Analysts say other states may follow suit, as operators brace for higher costs and tighter margins.

CHICAGO – The Illinois General Assembly passed a $55.2 billion state budget just seven minutes before the midnight deadline on Sunday. Among the most controversial elements of the deal: a new tax on every legal online sports bet placed in the state, aimed at plugging a projected $1 billion budget shortfall.

The law imposes a $0.25 tax on each of the first 20 million bets made annually by a sportsbook, jumping to $0.50 per bet beyond that threshold. The measure, expected to generate at least $36 million in yearly revenue, overwhelmingly targets market giants DraftKings and FanDuel, who are the only Illinois sportsbooks exceeding the 20-million-bet mark.

While some call the tax “discriminatory, punitive and constitutionally suspect”, noted the tax could force operators to reduce sports betting promotions, worsen odds, or raise minimum bets – changes likely to be felt by consumers.

Illinois To Affect Other States?

Touted by Governor J.B. Pritzker as the state’s seventh straight balanced plan, the budget included other tax increases as well.

• Tobacco taxes were raised from 36% to 45%
• A hotel tax exemption for short-term rentals like Airbnb was eliminated.
• Corporate tax hikes and a tax amnesty program were also part of the revenue plan.

Republican lawmakers criticized the tax-heavy approach, with Senate Minority Leader John Curran calling it a “bad budget” and House Minority Leader Tony McCombie slamming it as unfair to Illinois families.

Industry analysts warn the Illinois model could become a blueprint for other states with legal sports betting that are budget-strapped. New Jersey, North Carolina, and Louisiana are reportedly considering similar levies, and Maryland and Ohio have already floated additional tax hikes on sportsbooks.

Meanwhile, companies like DraftKings and FanDuel are expected to shift lobbying efforts away from promoting online casino legalization and toward fending off further per-wager taxes. Ironically, the controversial tax may accelerate the push for legal iGaming, seen as a more lucrative and sustainable source of state revenue.

• Next Read: States Wrestle Sports Betting Taxes Amid Surging Revenues

News tags: DraftKings | FanDuel | iGaming | Illinois | J.B. Pritzker | John Curran