New Illinois Sports Betting Tax Rate: Details On The Measure

On Sunday night, the Illinois Senate met to vote on a new measure that would alter the current tax rate for the sports betting market. The measure HB 4951 passed in the Senate to a vote of 37-22. Now, sportsbooks in Illinois will see a progressive tax rate, increasing gradually depending on the adjusted gross revenue (AGR). Because of an amendment made in the Senate before voting, the measure now heads back to the House of Representatives for final approval.

Let’s take a deeper look at the new tax rate for the Illinois sports betting market.

Illinois’ New Progressive Tax Rate Explained

The amendment to HB 4951 was to tax online and retail revenue separately. Both entities will be taxed at the same progressive rate but will not see their totals combined for AGR. Illinois originally taxed sportsbooks at a 15% rate across the board. Now, sportsbooks will see taxes increase gradually based on AGR, starting with 20% on the first $30 million in revenue.

Illinois Progressive Tax Rate For Sports Betting

• AGR over $30 million, 25%
• AGR over $50 million, 30%
• AGR over $100 million, 35%
• AGR over $200 million, 40%

The two biggest sportsbooks in Illinois are FanDuel Sportsbook and DraftKings Sportsbook. The new tax rate would see these operators face a potential 140% increase in taxes paid. These are the most likely operators to reach the $200 million in AGR and trigger the 40% tax rate.

Illinois would become the first market to run a fully progressive tax rate. This would also see Illinois have one of the highest potential tax rates in the nation, at 40%, second only to New York’s 51% tax rate. The measure would need to pass the House before becoming signed into law by Gov. JB Pritzker.

Sports Betting Alliance Voices Issues With New Tax Rate On Illinois Sportsbooks

The Sports Betting Alliance has voiced its concerns about the new tax rate. Following the vote, the Alliance took to its X account in response. The issue of the tax rate affecting odds and empowering the unregulated market was raised, including the potential for worse products and promotions for residents as a result of the new rate.

The Alliance was vocal against the measure throughout the legislative process. When the measure was proposed, the Alliance issued a legal opinion to the Illinois legislation.

“The proposed tax hike on sports betting is a well-intentioned but misguided effort to fill budget shortfalls,” read the opinion. “It threatens to drive bettors back to illegal markets, increase costs for Illinois consumers, harms local businesses, and reduce competition.”

The concerns did not affect lawmakers’ decisions, as the measure was passed in both the House and Senate. As HB 4951 heads back to the House for final approval, Illinois will likely usher in a new sports betting tax rate.