Illinois Senate Approves FY 2025 Budget with Sports Betting Tax Hike

The Illinois Senate has approved the FY 2025 budget, which includes a significant sports betting tax hike. The budget passed with a 38-21 vote, and it will now head to the House for consideration on Tuesday before reaching the governor’s desk.

This new budget nearly triples the tax rate for the largest sports betting operators in the state, such as BetMGM, DraftKings, Fanatics, and FanDuel. The Sports Betting Alliance (SBA), which represents these companies, labeled the decision a “disappointing decision” that will negatively impact operators.

Governor JB Pritzker had proposed a tax increase to 35% earlier this year. The Senate’s budget introduces a progressive tax system with rates ranging from 20% to 40%, based on adjusted gross revenue (AGR). Operators with the highest AGR would face a 40% tax, making Illinois the second-most expensive state for sports betting operators after New York, which has a 51% tax rate.

The new tax scale is as follows:

• 20% on AGR up to $30 million
• 25% on AGR over $30 million to $50 million
• 30% on AGR over $50 million to $100 million
• 35% on AGR over $100 million to $200 million
• 40% on AGR over $200 million

The Senate’s version also separates AGR for retail and digital sportsbooks, requiring separate taxes for each. This structure is different from the House’s version, which did not include the progressive tax when it was first approved. As a result, the bill must return to the House for concurrence.

Since sports betting became legal in Illinois in June 2021, operators have been paying a 15% tax. The proposed increase has mobilized opposition from the SBA, which rallied 55,000 Illinois residents to email lawmakers in protest. Jeremy Kudon, an SBA lobbyist, stated that the progressive tax “penalizes operators who invested in the local economy and created jobs.”

If passed, Illinois will become the second state after Arkansas to implement a progressive sports betting tax. Arkansas taxes casino revenue, including sports betting, at 13% for the first $150 million and 20% for revenue above $150 million. Meanwhile, New Jersey is considering raising its sports betting tax to 30% from 14.25%, and Ohio recently increased its tax rate from 10% to 20% for the 2024-25 fiscal year