Both DraftKings and Flutter Entertainment saw their stocks fall yesterday (May 28) when a gambling tax hike was proposed in Illinois.
Illinois lawmakers discussed the increase over the weekend in the 2025 budget meeting, but it hasn’t yet been formally approved.
The impact of the hike has been seen quicker than people have realized, with stocks of the big operating companies already taking a hit.
Flutter ended the trading day yesterday at $188.33, 7.7% lower than the final price on Friday evening before the long Memorial Weekend.
DraftKings saw a similar downward trend too as its closing price on Tuesday was $36.61. This figure is 10.2% lower than on Friday afternoon.
The substantial tax increase would mean DraftKings and Flutter Entertainment would qualify for the top bracket of payment.
Flutter Entertainment is an international sports betting and gambling company that owns FanDuel.
Proposed Illinois tax hike and what this means for operators
Late on Sunday night (May 26) senators passed a FY2025 budget that includes a sports betting tax rise making Illinois the second-most expensive state for wagering operators to do business in.
Operators with the highest adjusted gross revenue will have to pay a 40% tax and even the smaller operators will have to pay more at 20%. The standard has been a 15% tax which came into force when sports betting went live in June 2021.
All those who generate adjusted gross revenue of $30 million a year will be on the 20% tax whereas a report of more than $200 million a year would see the 40% tax rate.
There are other boundaries included too, all of which are significantly higher than what sports betting companies are currently paying.
The Sports Betting Alliance (SBA) has set up a ‘No Tax Hike Illinois’ page on its website as it urges people to tell legislators that no new taxes should be brought in.
In the reasoning for why this matters, they say: “More taxes mean worse odds for players. Customers will have access to fewer promotions and bonuses. A tax hike will increase illegal offshore sports betting.”
Featured Image: Photo by Joel Mott on Unsplash
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