Illinois Considers Increasing Taxes for Sports Betting Operators

Legislators in the US state of Illinois are debating a proposal that would see a dramatic rise in the tax structure applied to sports betting operators in the region. The large sports betting operators in the jurisdiction have voiced their concerns about the new legislation.

Proposals in Illinois to raise tax structure for sports betting operators

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Two of the biggest sports betting operators in the state, FanDuel and DraftKings, say they may have to cease operating in the state as details of the changes have been outlined. The proposed new tax framework is to be a graduated levy between 20% and 40% depending on the Adjusted Gaming Revenue (AGR) of the sports betting operator.

The current rate is 15% of AGR across all operators, however, the new rate will be a minimum of 20%, with operators paying 25% at $30 million, and 30% over $50 million. The highest thresholds would be a tax of 35% for operators over $100 million; and 40% for those with revenues over $200 million.

One of the reasons for debating the significant rise in taxes on sports betting operators is politicians in Illinois are looking at the levy charged by other states, in particular, New York which has a 51% tax rate on sports gaming companies and has led to the state collecting and average of $800 million a year in taxes.

The legislators in the state could not reach an agreement last week and have adjourned discussions until next week.

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Sports Betting Operators Say 40% Too High

There are currently eight sports betting operators in the state of Illinois and from their trading statements it is estimated that FanDuel and DraftKings are the two operators that would currently reach the 40% threshold. These two gaming operators have stated this new levy would see their taxes rise threefold annually.

It is believed the next three biggest sports betting operators in the region, BetRivers, Fanatics Sportsbook, and ESPN Bet will all reach the 30% limit by the end of the year.

The top two gambling operators have reacted by stating they feel these proposed tax rates are too high and would have a significant impact on their businesses. This has prompted both the top two operators to threaten to quit the state as they feel it is close to unsustainable for the companies to make a profit with taxes this high.


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