Illinois Proposes $52.7 Billion Budget with Sports Betting Tax

Illinois Governor JB Pritzker, in his second term as a Democrat, has unveiled a bold $52.7 billion state spending plan for the fiscal year commencing on July 1st. The proposal, announced on February 21st, includes tax hikes primarily targeting businesses, with a notable increase in the tax on sports betting.

Under this plan, the state would be left with a surplus rather than grappling with the previously projected deficit, with an anticipated surplus of nearly $128 million.

 

Key Points

1. Governor Pritzker's Budget Proposal: Illinois Governor JB Pritzker introduces a comprehensive $52.7 billion state spending plan, featuring tax hikes primarily aimed at businesses. The proposal, announced on February 21st, aims to address fiscal challenges while ensuring the state's financial stability.
2. Significant Sports Betting Tax Increase: One of the notable measures in Governor Pritzker's budget proposal is the substantial hike in the sports betting tax rate. He suggests raising Illinois' sports betting tax from 15% to 35%, projecting an additional $200 million in tax revenue. This move underscores the state's intention to capitalize on the thriving sports betting market.
3. Thriving Sports Betting Market in Illinois: Since its legalization in 2019, Illinois' sports betting industry has experienced remarkable growth, particularly during the COVID-19 pandemic. With consistently impressive figures, including a handle exceeding $1 billion for four consecutive months, Illinois has emerged as one of the leading gambling markets in the nation.

 

One of the standout measures in Governor Pritzker's budget proposal is the significant increase in the sports betting tax rate. He is advocating for Illinois' sports betting tax to surge from its current 15% to a substantial 35%, with estimates suggesting this move could generate an additional $200 million in tax revenue.

Furthermore, Governor Pritzker aims to extend a cap on deductions, allowing corporations to decrease their taxable income, potentially saving them $526 million. Additionally, the proposal includes revisions to policies regarding the sales tax collection by retailers, with projections indicating a revenue increase of $101 million. Moreover, a further $175 million would be freed from the state's general funds by shifting mass transit costs from sales taxes to the Road Fund.

Addressing lawmakers in Springfield, Governor Pritzker emphasized the importance of fiscal responsibility, stating:

 

“Our fiscal house is in order, and we are able to keep our commitments to the people of Illinois.”

 

The surge in the sports betting tax comes against the backdrop of a thriving sports betting market in Illinois. Since its legalization in 2019, Illinois' sports betting industry has witnessed remarkable growth, particularly during the COVID-19 pandemic when online sports betting was launched. With the state consistently reporting impressive figures, including a handle exceeding $1 billion for four consecutive months, it has firmly established itself as one of the leading gambling markets in the nation.

In December 2023, Illinois sportsbooks recorded a staggering $1.3 billion in handle, surpassing the previous month's record of $1.4 billion. This continued a trend of robust performance, with October and September also seeing handles in excess of $1 billion. Last year alone, Illinois collected $150.3 million in taxes from online and brick-and-mortar sportsbooks.

If Governor Pritzker's proposal is successful, Illinois would join a select group of states with a high sports betting tax rate. With New York and New Hampshire leading the pack at 51%, and Pennsylvania close behind at 36%, Illinois would position itself as a significant player in the industry.

However, while the focus is currently on sports betting, Illinois is also exploring opportunities to expand its gaming options. Although online casino legislation may take a backseat in the current budget proposal, it remains an area of interest for future consideration.

For those interested in staying updated on state legislation, particularly regarding online casino bills, following our online casino bill tracker will provide timely insights and developments.

Governor Pritzker's budget proposal underscores the state's commitment to fiscal prudence while leveraging the potential of burgeoning industries like sports betting to bolster revenue streams and address fiscal challenges. As Illinois navigates through economic uncertainties, the proposed measures aim to ensure stability and sustained growth in the years ahead.