Sports Betting

Illinois Gov. has signed a new progressive sports betting tax rate into law

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JB Pritzker Illinois pic

On Wednesday, Illinois Governor JB Pritzker signed a bill to establish a new progressive sports betting tax rate in the state. He signed the $53.1 billion budget package for the 2025 fiscal year. These brand-new tax rates will go into effect starting July 1. About a week ago, HB 4951 was passed during an all-night legislative session. The House of Representatives voted in favor of concurrence for five Senate amendments after the bill was passed in the upper chamber. 

In February, JB Pritzker proposed a tax rate increase from 15% to 35%. More than double what it had been. He estimated that the increased tax on gaming operators in Illinois could help bring the state $200 million in revenue. His original proposal was tweaked to a progressive sports betting tax. It is the first of its kind in any legal sports betting state. Arkansas has a progressive tax for its gaming revenue, but it doesn’t include sports betting. Illinois is the 11th state to have any portion of sports betting revenue taxed at 20% or higher. Governor Pritzker had this to say.

The FY25 budget is another demonstration of the fiscal responsibility that has guided me from Day 1 of my administration,” said Pritzker. “This budget is balanced, pro-family, cuts taxes on workers, and opens up doors of opportunity for employers and employees alike. I’m proud to sign it today and look forward to working together to bring these investments to life in a healthier, more prosperous Illinois.”

What will the new progressive tax rate on sports betting look like in Illinois?

According to figures from Illinois’ most recent 12-month period, only FanDuel and DraftKings generated enough revenue to be taxed at the highest rate, 40%. That’s because each operator surpassed $200 million in revenue. For most operators, they will not be taxed at the highest rate. FanDuel and DraftKings are outliers in the market who never seem to have a lul. They’re two of the top sports betting operators in the country for a reason. 

While a 40% tax rate is the highest, the lowest in Illinois’ new progressive sports betting tax is 20%. That’s for the first $30 million in revenue. The next $20 million in revenue will be taxed at 25%. Operators that bring in $50 million to $100 million in revenue will be taxed at 30%. Anything from $100 million to $200 will be taxed at 35%. As stated earlier, over $200 million in revenue will be taxed at the highest 40% rate.  Only New York has a higher tax rate for sports betting at a whopping 51%.