Illinois Gov. J.B. Pritzker sees a gaping hole in the budget and has proposed increasing the sports betting tax rate as a way to partially close the hole. The rate, currently at 15 percent, would rise to 35 percent and result in a potential $200 million more a year for the state.
“From Day One, Gov. Pritzker has taken action to ensure corporations are paying their fair share,” Pritzker’s Press Secretary Alex Gough, told the Daily Herald. “Since the legalization of sports betting in Illinois, gaming companies have enjoyed one of the lowest sports wagering tax rates in the nation. In that time, the sports betting industry has exploded, and corporations are raking in huge profits.”
A handful of tax analysts and Republican lawmakers worry that it could change the trajectory of the industry, cut odds, and provide a reason to wager with illegal sportsbooks.
“The most likely result in the short term is bettors will get worse odds because the sportsbooks will want to make their money back,” Adam Hoffer, director of excise tax policy at the Washington, D.C.-based Tax Foundation, told the Herald. “But there are long-run effects as well, where you might see it deter other companies from opening (sportsbooks) in Illinois, which would hinder competition.”
Louisiana, Maryland and Virginia share the same tax rate on profits. Then again, New York, New Hampshire, Delaware and Rhode Island charge a minimum of 50 percent.
“I can’t believe every state hasn’t brought it up to 51 percent like New York,” added Alan Woinski, president of consulting and research firm Gaming USA Corp. “I’m not a fan of tax rates being raised for anything, but the industry kind of brought this on itself.”
While officials anticipated high taxes would chase bettors away, it turned out not to be the case.
Don’t think Illinois is impoverished in that department. The state pulled in $19.2 million in December 2023, the most recent month on tax data from the Illinois Gaming Board. The figure came in 14 percent higher than October, the next most successful month.
The existing tax revenues end up in the state capital projects fund. Should the tax leap to 35 percent, the additional 20 percent would be used for education, health care and the migrant crisis.
Senate Minority Leader John Curran says the state is going about this in the wrong way.
“The governor’s inability to control his spending is now turning into a very aggressive tax increase on a new Illinois industry,” he told the Herald. “Regardless of where you stand on sports betting, raising taxes by nearly $1 billion is unfair to hardworking Illinois families and businesses.”
In any case, the tax rate decision is preliminary, said State Rep. Dan Didech.
“But I’m open to it,” he said. “The rationale is we’re under a substantial amount of budgetary pressure this year in a way we haven’t in previous years.”
