• Loading stock data...
Wednesday, December 11, 2024
The 2024 Best Employers in Sports Award winners have been announced! See the full list of winners

More States Hiking Sports Betting Taxes, Eyeing Revenue Windfall

  • Illinois more than doubles its peak tax rate on sportsbook operators, with others likely to follow.
  • Growing betting volume and market-leading activity in New York give legislators greater latitude.
DraftKings
Mark J. Rebilas-USA TODAY Sports

New York definitely raised eyebrows when it implemented nearly three years ago a 51% tax on sports betting revenue, a rate far above most other states that have pursued legalization. But after nearly $2 billion in collected tax revenue from sports wagering in the Empire State just since online sports formally began there in January 2022, other states are moving quickly to increase their tax rates and garner money they believe has been left on the table.

The Illinois state legislature, after declining to move on a separate issue around the Bears’ stadium funding, this week approved a budget that increased the sports betting tax from the prior flat 15% rate to a progressive scale of 20–40%, depending on the level of adjusted gaming revenue that a particular sportsbook generates. That top rate in Illinois is now the second-highest level in the country, trailing New York and an identical 51% in New Hampshire and Rhode Island as well. 

Doubling the Amount

But the Prairie State is far from alone. Ohio already doubled its sports betting tax rate last year from 10% to 20%. A bill introduced last month in New Jersey would similarly double that state’s rate from 15% to 30%. And more such moves are expected elsewhere around the country. 

“We believe the [online sports betting] blended tax rate is likely to increase over the next three to four years,” wrote Oppenheimer analyst Jed Kelly in a research note. 

The reasoning behind the heightened legislative push to raise sports betting taxes is clear. Consumer interest in sports betting continues to soar—easily setting new records for overall handle and sportsbook revenue in 2023. New York, meanwhile, consistently is the national leader in monthly state-level betting handle, and operators continue to covet the ability to do business there—even to the point of reversing prior opposition to the idea. 

Those factors have given legislators a clear opening to use increased taxation on sports betting as a means to fund other priorities. In Illinois, the additional funds collected will be used to help support an increased child tax credit.

Operator Pushback

Not surprisingly, many operators have actively resisted the increased taxation. The Illinois budget season was marked in part by an active lobbying and advertising push by sportsbooks opposing the heightened rates. The Sports Betting Alliance—a coalition of major legal operators such as DraftKings, FanDuel, Fanatics, and BetMGM—called the Illinois move one that will create “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.”

Jason Robins, chairman, cofounder, and CEO of DraftKings, similarly predicted higher costs to bettors in a recent call with analysts. 

“In the end, the cost has to get absorbed by the consumer if the government raises taxes,” he said. “So there’s various levers to that. Also, we could lower external marketing, which I think will be partially just driven by the fact that if taxes go up, we’re going to have to create better margins.”

There also has been a material impact to the ongoing tax developments on the stock market. DraftKings stock has declined by 15% in the last week, while shares in FanDuel parent Flutter Entertainment are down by nearly 8%, and ESPN Bet operator Penn Entertainment has similarly fallen by 6%.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

F1’s TV Ratings Similar to 2023, but Still Below the Record Highs..

The F1 season averaged 1.1 million viewers in the U.S.

WBD Secures Comcast Deal, Readies for Future Without NBA Rights

The TNT Sports parent company continues to remake itself in dramatic fashion.

BYU Secures No. 1 2026 Hoops Recruit With $7 Million NIL Deal

Dybantsa chose BYU over UNC, Kansas, and Alabama.

Featured Today

Nov 2, 2024; Denver, Colorado, USA; Detailed view of a Wilson NBA basketball held by a referee during the second half between the Utah Jazz against the Denver Nuggets at Ball Arena

‘Obvious Weak Point’: Refs Remain an NBA Gambling Concern

A season after Jontay Porter, the biggest risk may not be players.
Nov 2, 2024; Ann Arbor, Michigan, USA; Michigan Wolverines cheerleader runs with a flag before the game against the Oregon Ducks at Michigan Stadium.
opinion
December 7, 2024

College Football’s Billionaire Backer Era Begins

Is this the new normal in CFB recruiting?
LA Galaxy forward Dejan Joveljic (9) celebrates with midfielder Riqui Puig (10) after scoring a goal against Seattle Sounders FC in the second half in the 2024 MLS Cup Western Conference Final match at Dignity Health Sports Park
December 6, 2024

With or Without Messi, Major League Soccer Is Barreling Into the Future

After the Cup final, the league looks to accelerate its growth.
Dec 18, 2022; Lusail, Qatar; FIFA president Gianni Infantino claps during the awards ceremony after the 2022 World Cup final between Argentina and France at Lusail Stadium.
December 2, 2024

FIFA Wants More Matches. Resistance Is Growing Inside the Global Soccer World

Resentment and frustration over expanded schedules is nearing a breaking point.
DraftKings

Sens. Say DraftKings, FanDuel May Have Conspired to Crush Competition: ‘One Company’

The senators asked the FTC and DOJ to investigate the gambling companies.
DraftKings
November 8, 2024

DraftKings Lowers Full-Year Guidance After Brutal NFL Outcomes

DraftKings cited a tough start to the fourth quarter in lowering its 2024 guidance.
December 4, 2024

Poker Pro Pleads Guilty to ‘Massive’ Sports Betting Tips Fraud

Cory Zeidman ran a scheme that amassed $25 million over 14 years.
Sponsored

How UBS Crafts Impactful Partnerships Across Sports, Arts, and Culture

As UBS continues to expand its impressive array of sports and entertainment partnerships, the company solidifies its position as a leader in wealth management.
Sports betting Analyst Steve Coughlin gives out high-fives on the set of ESPN's College Game Day at the University of Texas, ahead of the Longhorns' game against the Georgia Bulldogs in Austin, Oct. 19, 2024.
November 7, 2024

ESPN Bet at Critical Point As Penn Reports Quarterly Earnings

The two sides agreed to a 10-year deal last August.
Nov 4, 2024; Kansas City, Missouri, USA; Kansas City Chiefs wide receiver DeAndre Hopkins (8) celebrates with quarterback Patrick Mahomes (15) after scoring against the Tampa Bay Buccaneers during the second half at GEHA Field at Arrowhead Stadium.
November 6, 2024

Missouri Becomes 39th State to Legalize Sports Gambling

Missouri was the only state with sports gambling on its ballot this election cycle.
November 5, 2024

On the Ballot: Sports Betting, Former Athletes Impacting the 2024 Election

Several U.S. Senate candidates have sports backgrounds, while Missouri voters will consider legalizing sports betting.
Tony Hinchcliffe at Donald Trump rally.
November 4, 2024

Sports Betting Companies Holding Comic at Arm’s Length After Trump Rally

Hinchcliffe drew criticism over his comments at a rally for Trump.