Illinois lawmakers approved a new state budget that includes a substantial tax hike on legal sports wagers, effective July 1, 2025. The new legislation imposes a tax of 25 cents per wager on the first 20 million online sports bets each fiscal year, increasing to 50 cents per bet thereafter.
This new per-wager tax is in addition to a progressive tax rate passed last year, which can now reach as high as 40% for the most successful sportsbooks, up from a previous 15%. DraftKings and FanDuel, which collectively hold about 75% of the Illinois market, are expected to exceed 20 million wagers, thus facing the higher 50-cent per bet rate.
The tax increase is projected to generate over $36 million in yearly revenue for the state, but it poses a significant financial burden on operators like DraftKings. This regulatory change could pressure margins and potentially lead to strategic responses, such as passing costs onto consumers, which may impact customer acquisition and retention.
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