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The Illinois Senate voted on Sunday (26 May) in favour of a progressive sports betting tax up to a maximum rate of 40% of revenue.

Included as part of the state’s FY2025 budget, if the plan is implemented then Illinois’ sports betting tax rate will rank as the second highest in the union, second only to New York’s rate of 51%.

The budget has now returned to the House for approval, where lawmakers will vote on its contents in two weeks’ time, after the legislature’s summer recess.

The suggested top rate of tax is higher than the 35% initially floated by Gov. J.B. Pritzker in his proposed FY2025 budget in February.

Under the revised text, operators would be liable for 20% tax on revenues up to $30m, 25% for revenue between $30m and $50m, and 30% for revenue between $50m and $100m.

This will rise to a 35% tax rate on revenue between $100m and $200m, capping out at 40% on all revenue in excess of $200m.

This compares to the 15% flat rate currently paid by operators statewide.

As such, all currently active operators would see a tax increase under the proposals, although only DraftKings and FanDuel would be liable to pay the maximum rate.

Smaller operators, such as Rush Street Interactive, would therefore pay a reduced rate compared to their larger competitors under the plan.

The proposal has seen a backlash from some sports betting operators, which have indicated they would reduce investment in the state if it became law.

Operators threaten Illinois investment

The Sports Betting Alliance (SBA), which represents FanDuel, DraftKings, BetMGM and Fanatics, issued a statement yesterday outlining its opposition.

SBA President Jeremy Kudon said: “This is an extremely disappointing decision that will cause real harm.

“This tax hike will mean worse products, worse promotions, and inevitably, worse odds for Illinois customers — not to mention provide a massive leg up to dangerous, unregulated and illegal offshore sportsbooks who pay no taxes and adhere to none of Illinois’ sports betting regulations.

“This tax hike doesn’t just threaten the legal, regulated sports betting market — it will have devastating effects for operators’ in-state partners, including the most vulnerable downstate casinos, who rely on sports betting revenue to create jobs and invest in communities.

“Sportsbooks across the industry will have no choice but to reevaluate their level of investment and participation in the state should this become law.”

The SBA’s statement followed a campaign by the lobbying group to encourage customers to email their Illinois representatives over the tax hike.

The trade body said 53,000 emails were sent to the Illinois legislature and governor as a result.

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