Illinois has embraced the idea of taxing online sportsbooks more, and the state is at it again.
On the final day of May, the state’s lawmakers approved a new per-wager tax on online sportsbooks as part of the fiscal budget that will soon be signed into law by Gov. J.B. Pritzker.
The amendment was introduced and quickly approved by Democrats in the House. Pritzker praised the budget on his social media channels and said in a press conference that he plans to sign it into law.
The latest change comes after the state upped its tax rate on sports betting operators’ gross gaming revenue last year, implementing a new progressive tax system that increased the amount that most online sportsbooks pay and taxes market leaders FanDuel and DraftKings as high as 40%.
Bets will cost operators a minimum of 25¢
Now, Illinois has added a new tax on every single sports wager.
The state will charge 25 cents on each of the first 20 million online sports bets placed in the state every year, and 50 cents per wager for every bet a sportsbook takes beyond that.
With the change, Illinois is now one of the most expensive states to do business for the top-earning operators. Not only was the change made in short order but once Pritzker signs the budget into law, the new tax charge will come into effect on July 1.
Per the Earnings + More newsletter, Citizens JMP analysts estimate FanDuel and DraftKings, the only two operators to exceed the $20 million threshold for the 40% GGR tax rate, will take hits of around $80 million to their adjusted EBITDA in 2026 as a result of the new tax fee.
The Chicago Tribune reported that lawmakers estimate that the new sports betting tax could bring in around $36 million extra for the state per year.
Sportsbooks and Gronkowski warn against change
Just as they did for the new sliding tax scale last year, major sportsbooks voiced vociferous opposition to the latest change.
As the change was being introduced on Saturday, the Sports Betting Alliance (SBA) launched an email and social media campaign urging Illinois residents to oppose the alteration.
The SBA is a coalition of leading sports betting operators that includes FanDuel and DraftKings as well as BetMGM and Fanatics.
As of 10 p.m. on May 31, less than two hours before lawmakers gave the go-ahead, the SBA reported that Illinois residents had sent 55,000 emails to legislators to oppose the change.
The SBA also recruited the help of FanDuel ambassador Rob Gronkowski to spread the word.
The Responsible Online Gambling Association (ROGA), which comprises the four SBA members plus PENN Entertainment, bet365, Hard Rock Digital and Bally’s, also posted on social media opposing the plan.
“Illinois’ proposal to impose a tax on every sports wager would undermine responsible gaming,” said ROGA in a statement. “It risks incentivizing players to make larger wagers, or turn to unregulated operators that lack adequate RG protections.”
Those efforts were in vain, as lawmakers approved the fiscal year budget before the deadline of midnight on May 31.
In a statement, the SBA called the new tax “crippling”.
“With this change, lawmakers are essentially urging customers — and especially these small-dollar bettors — to switch to unsafe and unregulated sportsbooks who defy state consumer protections and generate zero taxes for state priorities,” asserted the coalition. “These illegal operators are the big winners from Saturday’s vote.
“It’s also extremely disappointing that the legislature chose to pass this tax and disregard the $1 billion in new revenue that a regulated and consumer-protected iGaming market would provide Illinois — allowing instead to let the current unregulated iGaming market that lacks any real consumer protections thrive.”
