Illinois Uncertainty: Graduated Wagering Tax Structure Proposal

Illinois may change how it taxes gambling by introducing a system where the tiered tax rate depends on the amount bet.

Illinois's latest budget suggests changing how taxes are calculated for betting companies. Instead of a fixed tax rate, they will now pay different percentages depending on their earnings from games after paying out winnings.

• 20% tax for AGR up to $30 million
• 25% tax for AGR over $30 million and up to $50 million
• 30% tax for AGR over $50 million and up to $100 million
• 35% tax for AGR over $100 million and up to $200 million
• 40% tax for AGR over $200 million

Big companies in the betting world, like DraftKings and FanDuel, will have to pay a high tax rate of 40% in Illinois, while smaller companies, such as Circa Sports, could be paying a lower rate of 20%. This big tax difference could make the large companies think about possibly leaving the state to avoid these costs.

Illinois's proposed tax model for businesses could be one of the highest among states, only falling behind New York, which has a 51% rate. Illinois wants to set its rate higher than the 35% Governor JB Pritzker recommended. In places like Massachusetts and New Jersey, similar tax increase ideas have not moved forward smoothly due to opposition and delays.

Illinois lawmakers must agree on a budget by the end of June, even though their working session has been extended. They are still discussing the budget and have delayed finishing their work to sort out their disagreements.

In 2023, eight online platforms in Illinois made more than a billion dollars, and the state got over $150 million in taxes from them. If the suggested changes happen, they could make the state earn more money or cause these companies to leave.

People working in the industry say the taxes might stop new jobs from being created and reduce money put into the state. They also worry that big companies might leave, which could really change the business environment.

People are waiting for decisions that will affect sports betting in Illinois. State officials and those in charge of sports betting are having discussions to decide the rules. They want to make sure the state makes money but also that the sports betting business can grow.