The SBA has issued a sharp critique regarding the recent Illinois tax hike, warning that increased levies could inadvertently drive enthusiasts away from regulated platforms and toward the dangerous shadows of the black market. The SBA has issued a sharp critique regarding the recent Illinois tax hike, warning that increased levies could inadvertently drive enthusiasts away from regulated platforms and toward the dangerous shadows of the black market. As legal options become more expensive, the industry fears that the growing popularity of sports betting will be stifled, pushing consumers to seek out unregulated alternatives to avoid the rising costs associated with state-sanctioned wagering.

SBA Warns Illinois Tax Hike Could Drive Sports Betting Toward the Black Market

• Sports Betting Alliance (SBA) criticises Illinois over recent tax hike on sports betting.
• Claims it will push smaller bettors towards unregulated bookmakers.

The Sports Betting Alliance (SBA), representing operators of US sportsbooks, has condemned Illinois over its recent sports betting tax increase. They argue that the new per-bet levy on gaming firms will be a catalyst for smaller bettors to shift towards unregulated markets.

In a statement from its Illinois chapter, the SBA rebuked the state for imposing a charge of 25 cents per bet on the first 20 million bets booked, which then increases to 50 cents for every bet thereafter—actions the group believes will negatively impact smaller bettors.

Data reveals that the state’s new per-wager tax will chiefly affect recreational bettors who place small amounts. With more than 50% of bets in Illinois under $5, this tax is likely to divert many residents to illegal, predatory sports betting markets.

This is of increasing concern to top consumer advocates including the Illinois Attorney General and the Better Business Bureau.

On a broader scale, members of the SBA include top entities like Bet365, BetMGM, DraftKings, Fanatics, and FanDuel.

SBA Raises Alarm Before Football Season

As the football season kicks off, the impact of Illinois’ tax environment intensifies, especially given that football ranks as the most wagered-on sport across the US.

In response to the recent tax rise, sportsbook operators in Illinois are reevaluating their practices, with some implementing per-bet fees or minimum bet requirements. These changes may further contribute to a migration of bettors to unregulated markets.

A growing number of companies are beginning to pass on the burden of the Illinois per-wager sports betting tax to customers. This transition will likely escalate the risks associated with the flourishing illegal online gaming market.

Last week, Caesars Sportsbook, alongside DraftKings, Fanatics, and FanDuel, began assessing per-bet fees in Illinois. Notably, BetMGM, Circa Sports, ESPN Bet, Hard Rock Bet, and Rush Street Interactive have introduced minimum bet requirements, albeit on smaller amounts, in response to the new tax.

Enduring Criticism

In the sports betting circles, organisations that have started implementing transaction fees, including the SBA, have encountered notable criticism. Observers argue that the SBA should have anticipated this latest tax increase as Illinois adopted a progressive tax scheme last year.

According to their statement, “Alongside Illinois’ graduated tax for 2024, the current per-wager tax places the burden of the highest taxes paid by legal sports betting customers in the country.” They caution that unregulated offshore operators are presenting more appealing betting options without the consumer protections mandated for legal venues, such as age verification and regulatory oversight.

Conclusion

The escalating costs tied to legal sports betting in Illinois, coupled with a lack of regulation for illegal markets, can only spell trouble for the state’s recreational bettors. As the sports betting landscape continues to evolve, it’s essential for authorities to consider the effects of taxation on consumer behaviour.

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