Major sportsbook operators in the US like BetMGM, DraftKings, Fanatics, and FanDuel have formed the Sports Betting Alliance (SBA). They are encouraging consumers to help fight against a potential tax hike for Illinois. Governor JB Pritzker suggests that the state raise its sports betting tax rate from 15% to 35%. A massive increase. 

Legal Sports Report noted that the Sports Betting Alliance has sent over 25,000 emails to the Illinois legislature and Gov. Pritzker. The SBA lists three key bullet points on its website on why raising the tax rate for sports betting is an issue. They note that more taxes mean worse odds for bettors. Additionally, customers will have access to fewer promotions and bonuses they might have had in the past. Finally, a tax hike could draw bettors to illegal offshore sports betting markets. Legislators have until the end of May to vote on a proposed tax hike.

What other concerns does the SBA have for a potential tax hike?

The Sports Betting Alliance reported that a “133% tax increase” would mean less money for operators. That’s money they could use to invest in technology upgrades, responsible gaming efforts, and customer support teams. Companies in the SBA entered Illinois thinking they would operate under a 15% tax rate. Currently, a majority of these companies are operating in the red and still invest because they know profits will be there eventually. 

However, if the tax rate in Illinois is raised to 35%, that completely changes everything. How will companies be able to continuously pay for these investments and still make enough revenue to operate? Doubling the tax rate in Illinois could do more harm than it does well. Additionally, this is not the first time that major sportsbook operators have had an issue with high tax rates. 

In January 2023, DraftKings CEO Jason Robins voiced his frustrations with New York legislators. He said that without a reduction in the tax rate, DraftKings might be forced to offer worse odds in the Empire State. Before sports betting was launched in New York, the nine licensed online sports betting operators had already agreed to a 51% tax rate. To legally operate in New York, DraftKings CEO Jason Robins said they had no choice but to comply with the noticeably high tax rate. 

Another state that is considering a tax hike is New Jersey. They reportedly want to raise their sports betting tax rate from 14.25% to 30%. Additionally, Ohio Governor Mike DeWine signed into law an increase in the sports betting tax rate from 10% to 20%