'Stop the Sports Betting Tax Hike in Illinois' FanDuel Demands, Other Operators Question Motives

It's tax season and what better time to raise taxes than now perhaps?

That's exactly what the state of Illinois is planning.

Casino and sportsbooks operators in Illinois up until now have paid a 15% tax on their revenue once payouts are made to customers since the state began regulating the activity back in 2020

Governor J.B. Pritzger's latest budget proposal calls for an increase to 35%.  The government anticipates an extra $200 million coming into the state as a result.

FanDuel began encouraging its customers to write lawmakers in Illinois and demand they keep the tax "as is".

"We NEED your help!  The Illinois legislature wants to MASSIVELY increase the tax rate on your favorite form of entertainment - placing bet on the teams, players and games that you love!

"Use the link below to tell Governor Pritzger and your state representatives to say NO to a sports betting tax hike."

The message, however, is slightly misleading.

The proposed tax hike will be placed on the operators, like FanDuel.  Customers are likely going to believe it is they who must pay the increased tax.  To some extent they will in the form of less competitive lines and bonuses.  But gamblers will be paying the same tax rate regardless of what steps the Illinois legislature takes.  The Individual Income Tax Rate of 4.95% applies to sports betting winnings in the state of Illinois. 

Joe Brennan, Jr., who operators the much smaller sportsbook Prime Sports suggested via his Twitter feed that FanDuel likely has ulterior motives.

“Stop cynically agreeing to 51% tax rates in other states to block competition from smaller operators," he tweeted. "You’re the ones who gave IL license to ask for more taxes.”

Brennan, Jr. is likely referencing the 30 percent plus tax found in states like Pennsylvania and New York, and quite possibly New Jersey if lawmakers in the Garden State have their way.

While Prime Sports does not currently operate in Illinois, they did just launch in New Jersey.

New Jersey Senator John McKeon has formally introduced his new bill to increase tax for online gambling and sports betting to 30%. Currently, online gambling and sports betting are taxed at 15% and 13% of gross gaming revenue respectively.

- Gilbert Horowitz, Gambling911.com