Digital Wager Wire highlights the most important events impacting the domestic and international sports betting and gaming industry each week throughout the year.
Illinois Increases Sports Betting Tax Again
Another year, and another increase to the sportsbooks’ tax burden and a decrease to its bottom line. Illinois is now the latest state to slap their bookmakers with a tax hike; only this time, they are charging 25 cents per bet for the first 20 million transactions and 50 cents per bet over that in addition to the tiered tax structure they already have on sportsbooks’ revenues.
Illinois lawmakers are hoping the increase raises an additional $36 million for the state’s General Fund. This is the second consecutive year a tax increase has been imposed on the state’s sportsbooks. Last year it went from a 15% tax on revenues to a tiered structure, inflicting the most harm on the major sportsbooks like FanDuel and DraftKings.
Last year’s increase was as follows:
- 20% on annual revenue below $30 million.
- 25% for revenue up to $50 million.
- 30% for up to $100 million.
- 35% for up to $200 million.
- 40% for more than $200 million.
At the time, Citizens JMP Securities analyst Jordan Bender wrote, “The graduated structure [in Illinois] changes that equation where the top companies can’t structurally gain a strategic foothold in tougher regulatory environments, creating a more even playing field when it comes to the tax environment. In terms of market size, we would expect growth to be impaired by the lack of investment.”
The Sports Betting Alliance, comprised of FanDuel, DraftKings, BetMGM, and Fanatics, called the tax increases “discriminatory, punitive, and constitutionally suspect.” The sports betting industry trade group also issued the following statement:
“For the second consecutive year, the Illinois legislature chose to balance its budget with a crippling tax on legal online sports betting operators and their million-plus Illinois customers—this time with no warning and no consideration of the devastating impact this tax would have on the legal market.”
DraftKings Says No to Sands Nassau Coliseum Casino Proposal
The Las Vegas Sands has invested $214 million to control the lease for the former home of the New York Islanders, the Nassau Coliseum. It was once the location where the Las Vegas Sands proposed a casino resort, which became one of the 11 bidders for three of New York’s highly coveted downstate casino licenses. However, as far back as October, there were warning signs that the Sands was having second thoughts.
During a third-quarter earnings call, Las Vegas Sands Chairman and CEO Robert G. Goldstein cited the looming specter of online gambling as a troubling concern for land-based casino companies. “I’ve always been the biggest advocate for New York and other jurisdictions,” Goldstein said at the time. “The only concern I have these days is the ongoing strength of online gambling. We can’t ignore what’s happening in New Jersey, in Pennsylvania, and in Michigan.”
But now they have done a full 180 and are looking for another company to assume the lead role. Enter mobile sportsbook, Boston-based DraftKings. Those discussions were just preliminary and ended abruptly with DraftKings spurning any interest in the project.
“There is no deal between the companies, nor will there be,” said an anonymous source close to the negotiations. “DraftKings will not be taking over the Sands bid.”
The Sands is running out of time, as applications are due on June 27th and a decision will be made as to which three bids will be accepted in December.
