Shares of sports-betting companies such as DraftKings and FanDuel parent Flutter Entertainment are experiencing a decline on Tuesday following the Illinois Senate’s approval of a new state budget that includes a progressive tax rate on sports-betting firms. The tax rate ranges from 20% to 40%, depending on the amount of bets handled, which could impact major players like DraftKings and FanDuel the most. These companies have expressed concerns that higher tax rates could result in worse odds and fewer promotions for customers.
The bill was passed as an amendment to HB4951 and is expected to be voted on by the state House. If the bill becomes law, Illinois would have one of the highest sports-betting tax rates in the country, second only to New York. Other states like Ohio and Colorado have also considered raising taxes on gaming companies as the market continues to expand.
Sports-betting lobbyists have warned that major operators like DraftKings and FanDuel could potentially leave Illinois if the tax hike goes through. However, the companies have not publicly commented on the legislation. The Sports Betting Alliance, which represents several sports-betting companies, has launched a campaign against the tax increase, urging Illinois residents to contact their legislators.
As a result of the news, DraftKings shares dropped over 12% and FanDuel parent company Flutter’s stock fell nearly 7% on Tuesday. Despite these declines, Flutter’s stock is still up 6% for the year. Overall, the sports-betting industry is facing challenges as different states consider raising taxes on gaming companies.
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