The new progressive Illinois sports betting tax has officially been introduced as Gov. J.B. Pritzker signed the state’s budget into law on Wednesday.
New sliding scale ranges from 20-40% rate
The budget, which had already been approved by both the House and the Senate, contains an overhaul of the state’s sports wagering tax system. Starting July 1, sportsbooks will now be taxed on a sliding scale depending on their adjusted gross revenue.
AGR above $200 million will be taxed at a new high rate of 40%, nearly triple the previous flat rate of 15%. That makes Illinois’ tax ceiling the second-highest rate imposed on sportsbooks, behind New York’s 51% rate.
Earlier this year, Pritzker had proposed an increase to 35%. Instead, the revamped proposal that has now become law has scrapped a flat tax rate for a progressive system.
Pritzker not concerned by sportsbook giants’ threats to leave
The Sports Betting Alliance (SBA), a coalition of leading sports betting operators that includes FanDuel and DraftKings as well as BetMGM and Fanatics, voiced strong opposition to the new tax system before Pritzker signed the budget into law.
The SBA called the Illinois sports betting tax overhaul an “extremely disappointing decision that will cause real harm.”
The statement also suggested that SBA members could be forced to rethink their Illinois operations as a result, or perhaps even pull out of the state altogether.
Pritzker, though, is not concerned by that possibility. He said it’s simply a matter of the most profitable sportsbooks paying “their fair share.”
On Wednesday, after signing the budget, he pointed to sportsbooks’ continued operation in New York under a 51% tax rate as evidence that sportsbook giants will have no issues paying the new Illinois sports betting tax rate.
“They’re not leaving New York, and they’re not leaving the other states,” he said, per ABC7 News. “You see we’re the third-largest sports betting market for sports betting companies, and we had a much lower tax rate than many of the largest of those markets.”
He said after the bill passed in the legislature last week that the focus was on making sure “companies that can pay more pay more. And, indeed, we kept the tax on sportsbooks lower than the top states in that arena.”
