Illinois raises taxes on sports betting, affecting major operators
- Illinois plans to implement a new per-wager tax on sports bets to balance its budget and aims to generate over $36 million annually from this measure.
- Major betting stocks like DraftKings and FanDuel have seen declines of 7.44% and 2.44% respectively due to investor concerns about the tax hikes.
- The Sports Betting Alliance has voiced strong opposition to the new tax, labeling it as damaging to both operators and consumers in the legal betting market.
In Illinois, a significant change in sports betting tax legislation has occurred. The state's legislature approved a $55 billion budget that includes $800 million in tax increases, with a specific focus on raising taxes on legal sports wagers. This measure was taken in light of the state's effort to balance its budget and enhance revenue streams amid financial pressures. Illinois Governor J.B. Pritzker has committed to signing the bill, which is expected to yield over $36 million annually from per-wager taxes on bets placed within the state. The impact of this new tax policy is already being felt in the market. Major betting stocks experienced declines as a direct consequence of the tax increases. DraftKings' stock price fell by 7.44% on NASDAQ, while Flutter Entertainment, which operates FanDuel, saw a 2.44% decrease on the New York Stock Exchange. Additionally, MGM Resorts, which operates BetGM alongside Entain, experienced a 1.9% drop. This trend highlights the growing concerns among investors regarding the viability of legal sports betting and the competitive landscape. Illinois joins a wave of states reevaluating their sports betting tax strategies. Twenty-seven states and the District of Columbia currently allow online sports betting statewide, with several others like Maryland considering similar increases. The Sports Betting Alliance, which encompasses DraftKings and FanDuel among other operators, vehemently opposed the tax, arguing that it unfairly burdens legal market participants and their customers. They characterize these tax hikes as detrimental to the burgeoning legal sports betting market, indicating a need for a reevaluation of the overall strategy towards tax revenue in this sector. Furthermore, analysts have pointed out that while taxes may be levied on operators, the operational costs will invariably transfer to consumers, impacting the overall betting experience. Industry experts like Robert Walker, formerly a sportsbook director for MGM Mirage, have raised alarms about the challenges posed by competing markets, such as those offering sports prediction services, which could siphon off demand from traditional betting platforms. As such, Illinois’ tax hikes might not only affect operators but could also influence the habits of sports bettors, as they navigate a changing landscape in legal gambling.