Illinois sportsbook operators will now be facing a higher tax rate, as the state has implemented a new progressive tax based on adjusted gross revenues. Previously paying a 15% tax, companies will now be subject to rates ranging from 20% to 40%, making Illinois the second-highest taxed state for sportsbooks in the nation. This change is estimated to generate over $200 million in additional revenues for the state.
In 2023, Illinois earned $1.5 billion in tax revenue from online sports betting and casinos, while the state lottery brought in $2.32 billion. The sports wagering industry has been booming, with a 22% increase in revenue to $3.33 billion in the first quarter of 2024, sparking interest from state governments across the country.
New York has implemented a maximum 51% tax rate, while New Jersey is considering increasing its tax rate to 30%. Despite failed proposals in states like Massachusetts to raise tax rates, the industry continues to attract investors. Companies like FanDuel and DraftKings have seen significant growth, with DraftKings stock price more than tripling in 2023.
The U.S. Supreme Court’s 2018 decision to strike down a federal ban on sports gambling has paved the way for expansion, with 30 states and Washington D.C. now allowing online sportsbooks. The industry is expected to continue growing, with DraftKings projected to post annual profits in 2025. Overall, online sports gambling operations have boosted revenue for larger gambling-focused companies, showing the potential for continued growth in the market.
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