Sports Betting Alliance Shares Outrage Over New Illinois Tax

The sports betting industry isn’t mincing words over a controversial new Illinois tax.

The Sports Betting Alliance accused lawmakers in the Land of Lincoln of discriminatory practices when they passed a new tax on operators. The tax was included as part of the recently approved state budget and requires online sportsbooks to pay a tax on each bet they accept. The group, whose members include the country’s top sportsbook operators, has promised its fight against the change isn’t over.

The new tax comes one year after Illinois switched to a tiered tax system based on how much revenue each sportsbook generates.

Top Operators Will See Massive Revenue Losses

When Illinois switched to a tiered tax system last year, it led to the state’s biggest operators taking the largest hit. FanDuel and DraftKings both saw their rates increase from 20% to 40% under the new system, largely due to their market dominance. Now, they’ll once again be feeling the most pain from yet another tax change.

Under the new per bet tax system, operators would all be taxed 25% on each wager until 20 million are accepted. Once that number is reached, the tax jumps up to 50%. With FanDuel and DraftKings consistently surpassing that number, they may end up taking an even bigger hit than they did with the tiered tax system.

SBA Says Bettors Hurt Most by Tax

The SBA released a statement on its website that was meant as an appeal to Illinois bettors. They warned that operators will have to offer watered-down odds and fewer bonuses to compensate for the loss of revenue from the new tax.

“Make no mistake, this discriminatory, punitive, and constitutionally suspect tax increase on legal sportsbooks that have invested more than a billion dollars in the state will be destabilizing for regulated sports betting in Illinois. A per bet tax most penalizes small recreational bettors — many of whom are betting a single dollar or two,” the SBA statement read.

New Tax Could Spread Beyond Illinois

While the SBA’s response is focused on Illinois, it knows that the fight may not stop there. States across the country have been aggressively looking for options to increase tax revenue from the sports betting industry. With almost all proposals for major tax hikes having failed, many lawmakers have been looking for other ways to get a bigger cut of the sports betting industry.

If the Illinois market continues to thrive, it will likely lead to many other states following suit. That means the SBA must make a stand now, or risk their members taking a massive hit to their revenue.