Despite a proposed tax hike in Illinois, Gov. J.B. Pritzker remains confident that major betting companies will not withdraw from the state
Illinois Gov. J.B. Pritzker does not think companies like FanDuel and DraftKings will leave the state after a major tax increase.
FanDuel and DraftKings, which combined reached $729 million in revenue generated from Illinois bettors last year, are now reconsidering their investments and operations in the state. Earlier in May major betting companies in the state even initiated a campaign against the proposed tax hike through The Sports Betting Alliance (SBA).
But Pritzker has said that the new measures are fair, making sure these extremely successful companies give back to the state, reported The Chicago Sun-Times.
Experts like Victor Matheson, an economics professor at the College of the Holy Cross, do not think companies will pull out of Illinois. While they will not be happy about paying higher taxes, Matheson said they have made plenty of money off gambling in Illinois over the years.
He added that people had similar concerns about casinos leaving for states with lower tax rates years ago when Pennsylvania first introduced them. However, with all the money those operators are making, there is zero chance anyone goes anywhere.
The new tax structure scales taxes based on revenue thresholds. Sportsbooks will be taxed at 20% on net revenue up to $30 million; 25% up to $50 million; 30% up to $100 million; 35% up to $200 million; and 40% if they surpass $200 million.
This makes it similar to how much money casinos pay right now depending on size or location within the state. It is aimed at getting more out of larger operators such as DraftKings and FanDuel.
The adjustment comes as the state’s sports betting market has taken off, with residents wagering $156 a second. Though it faced opposition from Republican lawmakers and Democrats who feared squashing a burgeoning industry, the bill passed. State Rep. Curtis Tarver, D-Chicago, who voted for the bill, acknowledged how difficult it was to give up revenue at a time when the state is in such dire financial straits.
Jeremy Kudon, president of the SBA, called into question why they were being singled out and further said: “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.”
Notwithstanding this, Gov. Pritzker is positive about the move. According to his office’s calculations, the gradual tax rate will bring in more than $200 million he had anticipated with a flat tax rate of 35%, hence aiding in stabilizing Illinois’ finances.
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