HomeIllinois Sports Betting NewsIllinois In-State College Betting Ban Now Live

Illinois In-State College Betting Ban Now Live

The Illinois college betting ban, effective July 1, 2024, marks a significant shift in the state's sports betting landscape. This ban, enacted through Public Act 103-0592 and signed by Governor J.B. Pritzker, prohibits all wagering on Illinois-based collegiate teams.

Image: IMAGO / ZUMA Press Wire

This legislative move not only eliminates an entire segment of the betting market but also accompanies substantial changes to the tax rates for sports betting operators, potentially reshaping the industry’s economic dynamics within the state.

Immediate Impact of the Ban

Prior to this legislation, Illinois allowed limited betting on in-state college teams, but with heavy restrictions. Bettors could only place “classic” wagers—point spreads, moneylines, and point total over/unders—on Illinois teams, and these had to be made in person at sportsbooks. Prop bets on individual player performances were strictly off-limits. Despite these restrictions, the market for college sports betting was still a notable revenue stream for operators like DraftKings and FanDuel.

With the new ban, IL betting apps will no longer accept any bets on Illinois college teams, such as the IllinoisFighting Illini and the Northwestern Wildcats. This change strips operators of a significant portion of their betting handle, particularly during college sports seasons. However, betting on out-of-state college teams remains permissible, allowing Illinois bettors to wager on teams like Kentucky basketball or Florida football.

Licensing Renewals Amid Regulatory Changes

Coinciding with the betting ban, the Illinois Gaming Board renewed the licenses of seven sportsbooks for an additional four years, extending operations through June 2028. These renewals include prominent names such as DraftKings at Casino Queen and FanDuel’s partner, Par-A-Dice Casino. Notably, Hollywood Casino Joliet remains the only entity without an online betting platform, focusing solely on in-person wagering.

These renewals come at a crucial time, as the industry braces for the dual impact of the betting ban and new tax rates. The stability provided by the renewed licenses is somewhat offset by the uncertainty introduced by these regulatory changes. Operators must now navigate a landscape where a key market segment is off-limits, and their profitability is further threatened by increased taxes.

New Tax Brackets and Financial Implications

Public Act 103-0592 not only introduces the betting ban but also revamps the tax structure for sports betting operators in Illinois. The new tiered tax rates on gross sports wagering receipts are a substantial hike from the previous flat rate of 15%. The new rates are:

– 20% for annual AGSWR (adjusted gross sports wagering receipts) up to and including $30 million

– 25% for annual AGSWR between $30 million and $50 million

– 30% for annual AGSWR between $50 million and $100 million

– 35% for annual AGSWR between $100 million and $200 million

– 40% for annual AGSWR above $200 million

For top-performing operators like FanDuel and DraftKings, who fall into the 40% bracket, this represents a significant increase in their tax burden. Using 2023 data, FanDuel and DraftKings, which made $411 million and $319 million in profits, respectively, will now see these figures substantially reduced. The stock prices of both companies dropped dramatically following the announcement, reflecting investor concerns over the increased financial strain.

Illinois now boasts one of the highest tax rates on sports betting in the country, second only to New York’s 51%. This move raises concerns that other states might follow suit, further increasing the tax burdens on operators nationwide. While Massachusetts recently rejected a similar tax hike, the trend of rising taxes in the wake of budget deficits and the economic fallout from the pandemic remains a real threat.