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Illinois House approves increase in gambling tax

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The Illinois House of Representatives met early on Wednesday (29 May) to discuss proposals for increasing the gaming tax in Illinois.

The Senate approved the Illinois budget for FY2025 on Sunday, 26 May. The tax rate on gambling operators was also increased from 15% to 20%. Since June 2021, when sports betting was legalized in New Jersey, the current tax rate is in effect.

On Wednesday, the House approved the budget with 60 votes to 47. J.B Pritzker will decide whether or not to make the tax increase law. He initially requested a rate of 35%. Pritzker’s approval will bring the tax rate into force on 1 July.

Tax will now be charged at a rate of 20% for adjusted gaming revenues (AGRs) between $30m ($23.6m/EUR27.7m) and $30m, while operators with an AGR in the range $30m to $50m pay 25%. Taxes will be required for AGRs between $50m-100m, and 35% on revenue up to 200m.

Illinois’ largest operators will be particularly punished by the rise, as a rate of 40% on an AGR above $200m is deemed to be disproportionate. This would make it the second-highest figure in the US, behind New York at 51%.


A tax rise is approved early in the morning

It was not a given that the approval of a tax increase would be granted. It was passed around 4.30 am today.

Hannah Meisel, a reporter at the State House observed the voting and noticed that the votes “flipped back and forth”, before the chamber finally agreed.

Patrick Windhorst, Republican Representative in Illinois, noted that the voting time was 4:30 am. He said: “It should be obvious to all in this state just what the (Democratic supermajority) is prepared to do in order to force a tax hike down the throats the citizens of Illinois.”


Illinois industry opposition

As expected, the tax increase has been met by fierce opposition from industry.

Sports Betting Alliance represents Fanatics Sportsbook (SBA), FanDuel DraftKings, and BetMGM. The SBA has warned about the potential impact of tax increases on the state following the passing of the FY2025 Budget over the weekend.

SBA President Jeremy Kudon stated on X that “this tax increase doesn’t only threaten the legal and regulated sports betting markets – it’ll have devastating effects on operators’ partners in-state, including those most vulnerable casinos in the downstate, which rely on the sports betting revenues to create jobs, invest in their communities, etc.”

Leading Illinois operators felt the impact of the new tax even before the House approved it.

Stock prices for both DraftKings, and Flutter Entertainment (owner of FanDuel Group) declined this week as a result of the proposed tax changes.

Flutter stock fell 3.7% when the markets opened Tuesday, 28 May. Its closing price was $204.11 before the weekend. Flutter’s shares closed at $188.33 on Tuesday, 7.7% less than their closing price before the weekend.

DraftKings’ stock, on the other hand, dropped 12% from its pre-weekend close price of $40.75 to $35.88.

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