The Illinois assembly has passed a measure increasing gambling duty rates, which will become effective early Wednesday (May 29th).
The measure will impose a graduated tax rate on gambling operators, with the most successful operators being levied at 40%, up from the previous 15%. The bill was endorsed by the Senate on Sunday (May 26th) and was included in Illinois’ financial year 2025 budget.
The measure will impose a 20% tax rate on adjusted gross revenue (AGR) below $30 million (£23.6 million/€27.7 million), while operators with AGR between $30 million and $50 million will pay 25%. AGR between $50 million and $100 million will need to pay 30%, while AGR up to $200 million will pay 35%.
The new tax rates will be especially harsh for Illinois’ most prominent operators, with a 40% tax rate on AGR exceeding $200 million. The 40% rate would be the second highest in the US competitive market, behind only New York’s 51%.
Governor JB Pritzker, who initially sought a 35% tax rate, will now determine whether to sign the tax increase measure. If Pritzker approves, the rate will become effective on July 1st.
The Illinois assembly has sent the gambling tax increase measure to the governor.
The tax hike was a close call, but it ultimately passed early this morning at 4:30 a.m. local time.
Statehouse reporter Hannah Meisel observed the vote and stated it was a “back-and-forth” before the assembly finally reached an agreement.
We require a video of the roll call vote because there was so much back-and-forth. Ultimately, on the third attempt, the Democrats secured the 60 votes they needed, with Larry Walsh (D-Elwood) casting the deciding vote.
Republican Rep. Patrick Windhorst pointed to the time of the vote, stating, “It’s clear to everyone in this state that the Democrats are willing to do whatever it takes, even at 4:30 in the morning, to impose a tax increase on the people of Illinois.”
Illinois Businesses Oppose
The tax hike, part of the state budget, was met with strong opposition from businesses.
The Sports Betting Alliance (SBA), which represents Fanatics Sportsbook, FanDuel, DraftKings, and BetMGM, cautioned about the tax increase’s impact on the state after the fiscal year 2025 budget was passed over the weekend.
“This tax increase not only jeopardizes the legal, regulated sports betting market, it will also harm the businesses that partner with these operators, including the casinos in the southern part of the state that rely on sports betting revenue to create jobs and invest in their communities,” SBA President Jeremy Kudon said on X.
While Illinois’ lawmakers haven’t yet approved a tax hike, the state’s leading gambling companies are already experiencing the effects.
DraftKings and Flutter Entertainment (the parent firm of FanDuel Group) witnessed their share prices decline earlier this week in response to the tax proposal.
Flutter’s shares began trading on Tuesday (May 28th) at $196.64, down 3.7% from its weekend closing price of $204.11. Flutter’s stock concluded trading on Tuesday at $188.33, a 7.7% decrease from its weekend closing price.
Meanwhile, DraftKings’ stock plummeted by 12% from its weekend closing price of $40.75, to $35.88.
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