Earlier this month, Illinois began a sharp tax increase on its sportsbooks, with rates more than doubling for some operators.

This tax hike, driven by Governor Pritzker’s bloated budget, introduces a progressive tax system to Illinois’ robust sports betting industry. Under the new tax system, the industry will move away from a flat 15% rate to a graduated structure, ranging from 20% for its lowest-earning sportsbooks to up to 40% for high-end earners. This change is expected to impact both sportsbook operators and everyday bettors in the state.

During the spring legislative session, Senate Republicans voiced strong opposition to the new tax rates for Illinois sportsbooks, arguing that the increased taxes could harm both the industry and casual bettors. Republican lawmakers were also concerned that higher rates could drive operators out of the state and reduce the quality of sports betting options available to Illinois consumers.

When the proposal was first brought forward, some of the titans of the sports betting industry, including FanDuel, threatened to potentially leave the state if the new tax structure was implemented but have since reevaluated. However, concerns remain that the tax hikes will result in a net-negative outcome for Illinoisans, with major gaming outfits potentially looking to spend their marketing budgets elsewhere and offering less promotional opportunities for Illinois bettors.