Illinois Senate Approves 40% Tax Hike on DraftKings, Other Sports Betting Operators

May 28, 2024, 02:04 PM

The Illinois Senate has approved a significant tax hike on sports betting operators, with the new tax structure outlined in HB 4951. The progressive tax rate will range from 20% to 40% depending on annual gross revenue (AGR), up from the current rate of 15%. This decision has caused shares of major sports betting companies like DraftKings and FanDuel's parent company, Flutter Entertainment, to drop significantly. DraftKings' stock fell by as much as 12% following the news. The new tax rates will take effect on July 1st. Lawmakers have proposed this increase as a means to boost state revenue, with funds to be shared between the capital and general revenue funds. Additionally, an extra 1% tax on video gaming terminals has been included in the bill. The Illinois Senate's decision has sparked concerns among investors about the potential spread of similar tax hikes to other states. FanDuel, which paid $62M in tax in 2023, would have paid approximately $145M under the new structure. The bill passed with a 37-22 vote on May 26th.