Illinois Implements New Sports Betting Tax Hike

The state of Illinois has now implemented the increase in the tax rate applicable to its licensed sportsbook operators. The decision, which came as part of the state’s 2025 budget plan, is poised to have major implications for the industry, both within Illinois and across the nation.

Effective this week, sportsbook operators in Illinois will be subject to a progressive tax rate structure based on their adjusted gross revenues. This new system replaces the previous flat 15% tax rate, with the new rates ranging from 20% to a maximum of 40%. This change makes Illinois the second-highest taxed state for sports betting in the country, trailing only New York, which has implemented a staggering 51% tax rate.

The rationale behind this move is clear – the state is seeking to capitalize on the exponential growth of the sports betting industry and generate substantial additional revenues. According to projections, the new tax regime is expected to bring in over $200 million in additional funds for the state, a significant boost to its coffers.

The implementation of this increased tax rate is sure to have a profound impact on the operations and profitability of sportsbook operators in Illinois. With the tax burden now ranging from 20% to 40% of their adjusted gross revenues, these businesses will need to carefully re-evaluate their strategies and explore ways to maintain their competitiveness in the market.

One potential consequence of this change could be a shift in the competitive landscape, as smaller or less-established operators may struggle to maintain their viability under the new tax regime. Larger, more well-capitalized sportsbooks, on the other hand, may be better equipped to weather the storm and potentially even gain a larger market share.

While Illinois’ decision to hike its sports betting tax rate is notable, it is not an isolated incident. In recent years, several other states have also made similar moves, seeking to maximize the revenue potential of this rapidly growing industry.

For instance, New York, which had previously implemented a 51% tax rate, has become the benchmark for high-tax sports betting jurisdictions. Furthermore, New Jersey, another prominent player in the industry, is also considering doubling its current 15% tax rate to 30%.