New Illinois sports betting tax structure could lead to wide-scale adjustments

Illinois has unveiled a new sports betting tax structure, and it's one that could potentially lead to changes made by other states and sportsbooks across the country. 

Lawmakers in the Prairie State finalized a balanced budget over the weekend that includes a number of tax increases, including to sports betting. The new Illinois sports betting tax charges sportsbooks 25 cents per wager for the first 20 million bets they take, and then 50 cents per wager after that. This comes after Illinois increased its sports betting tax from 15% to a tiered system ranging from 20 to 40% last year. 

There were more than 370 million bets on sports made in 2024, with FanDuel and DraftKings taking in more than 300 million. Both will be greatly impacted in Illinois after this recent change. BetMGM, Fanatics, Caesars and bet365 also operate in Illinois. The Sports Betting Alliance, which represents major sportsbooks FanDuel, DraftKings, BetMGM and Fanatics, issued a statement regarding this new tax, calling it "discriminatory" and "constitutionally suspect."  

This tax structure could ultimately change how sportsbooks operate in states that decide to implement per wager tax charges like Illinois, all of which could impact bettors. Some options include adjusting odds to be less favorable, offering fewer promotional bets for users or implementing minimum bet thresholds. Many bettors place smaller bets between $1 and $5, so if Illinois sportsbooks are being charged 25 to 50 cents per wager, it may not be in their best interest to take bets of those amounts moving forward. Something else to watch is sportsbooks adding a surcharge to winning bets. DraftKings flirted with the idea last year before abandoning it due to public pressure. 

Illinois is hardly the only state to increase sports betting taxes, though they're the only state to implement this type of structure. Maryland just increased its sports betting tax by 5% and while Ohio's 20% sports betting tax increase did not make it through the budgeting process, a state Senator did propose a 2% tax on all sports betting. States across the country have been aiming to increase sports betting tax revenue, so it wouldn't be a surprise to see some try and follow Illinois' lead with these per-wager charges for sportsbooks during future legislative sessions.