DraftKings stock price drops 6% following Illinois sports betting tax hike
Tax has risen to 25% per wager for the first 20 million bets per fiscal year, increasing to 50% thereafter.
Key Points
- The state of Illinois has announced a new budget which contains a sports betting tax hike
- Operators will now be subject to a 25% tax per wager, with taxes rising to 50% once sportsbooks have accepted 20 million bets
- In response, DraftKings, Caesars and Fanatics have all experienced drops in share price over the past five days
Following the approval of a new budget by both chambers of Illinois’ state legislature, sports betting tax in the state is set to rise to 25% per wager for the first 20 million bets made per year, subsequently rising to 50% after.
Tax rates will (presumably) be set at 25% from the start of every fiscal year, rising to 50% should the amount of wagers placed with a given operator in Illinois surpass 20 million during the fiscal year. In response, DraftKings’ stock price has slipped by 6.15% over the past five days as of the time of writing, with Caesars’ and Bally’s stock prices having fallen by 8.69% and 13.24%, respectively, during the same period.
This newly specified rate will make Illinois’ sports betting tax one of the highest in the US, with early indicators from industry analysts suggesting that wagers with both FanDuel and DraftKings are likely to surpass 20 million per year. This means for at least a portion of every fiscal year, these operators will be paying a 50% tax rate on bets accepted within the state.
Moreover, this latest update follows another sports wagering tax hike, which passed through the Illinois Senate during May 2024 and specified the cheapest tax rate for any operator in the state would be at 20%, while the highest would be set at 40%.
Good to know: According to CNBC reports, FanDuel owner and operator Flutter also saw a 2% drop in share price following the announcement, which has since recovered
Indeed, this new budget also sees tax rises on tobacco and short-term rental properties – and includes over $55bn in spending. With regard to sports betting, the state is hoping to generate at least $36m in annual gambling revenue by implementing these changes.
Illinois’ state market is one of the biggest in the US for sports betting, largely due to the city of Chicago’s prominence in the sports industry. Throughout October 2024, it was reported that the state accepted $2.04bn in wagers during the month.
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