Illinois Gov. J.B. Pritzker is taking a page from Ohio Gov. Mike DeWine and using his budget to propose a big hike in the Illinois sports betting tax rate.
Currently, state sportsbooks pay 15% in taxes. Pritzker is suggesting the state more than double the rate to 35%, forecasting that it would bring in an additional $100 million in tax revenue for the state for the next fiscal year.
If approved, the rate would rival the 36% tax rate imposed on Pennsylvania sportsbooks and trail only that state and New York for the steepest tax rate in the country. However, Pennsylvania allows sportsbooks to deduct promotional credit spend from gross gaming revenue before paying taxes on adjusted gross revenue. Currently, Illinois sportsbooks are not allowed to do that, so Illinois would arguably be a more costly tax scheme than Pennsylvania.
Lawmakers will need to approve a version of the budget with this proposed new rate in order for it to take effect. Pritzker only introduced his budget yesterday and the sports betting tax hike is part of more than $900 million in proposed tax increases. If approved, the tax rate would take effect on July 1.
Last year, DeWine proposed doubling the Ohio sports betting tax rate from 10% to 20% just six months after the industry launched in the state. Small operators like Tipico voiced frustration that the market would change so substantially from the conditions operators agreed to when entering the state.
In New York, operators appeared before lawmakers and pleaded with them to revisit the prohibitive tax rate last year to no avail. Part of the commentary for lawmakers during that hearing was that operators knew what they were in for when they applied to be in the state.
