Concerns raised that Illinois’ proposed tax rate increase would boost black market
Jeff Ifrah says Governor JB Pritzker’s proposal to raise tax from 15% to 35% would have a knock on impact for sports bettors
Lawyer Jeff Ifrah has said Illinois potentially raising the sports betting tax from 15% to 35% is equivalent to “subsidizing” illegal, offshore sportsbooks.
In Governor JB Pritzker’s annual budget, released in February, the Democrat claimed a 20 percentage point tax increase would provide an additional $100m to the state.
Should the increase be implemented, it would make Illinois the third highest tax rate for a competitive US state after Pennsylvania at 36% and New York at 51%.
Sportsbooks have already hit back at the proposed hikes via the Sports Betting Alliance (SBA), with Ifrah making the case that the tax increase would have a detrimental effect on both the online and land-based sectors.
In an opinion piece for the State Journal-Register, Ifrah argued operators would not be able to absorb the “massive” tax hike and that the result would be a reduction in promotions and less favorable odds for customers.
He said: “The dramatic tax increase will have unintended consequences, driving customers back to illegal betting channels and hurting local businesses.
“Raising the tax rate on sports betting is akin to subsidizing the illegal, offshore sportsbooks that Illinois state lawmakers sought to eliminate when they legalized and regulated sports betting.
“Legal sports betting has only begun to dent Illinois’ robust illegal sports betting scene significantly, and these changes will inevitably push bettors back into the arms of illegal bookies.
“The result? Lower – not higher – tax revenues for Illinois as more bets are placed outside the regulated framework.”
The lawyer acknowledged the hike was a “well-intentioned” effort to raise revenue for the state but maintained it would ultimately be the wrong move, one which would risk undoing the progress made in the market to date.
He added: “The proposed tax hike on sports betting is a well-intentioned but misguided effort to fill budget shortfalls. It threatens to drive bettors back to illegal markets, increase costs for Illinois consumers, harm local businesses, and reduce competition.
“Rather than jeopardize the progress made in the legal sports betting market, Illinois should explore more effective revenue-raising solutions like legalizing online casino gaming. By embracing smarter fiscal strategies, Illinois can ensure a prosperous future for its residents and businesses alike.”
Massachusetts is also looking to raise its tax rate to 51%, which would bring it in line with New York as the highest tax rate in the country.