Two more sportsbooks have responded to Illinois’ sports betting tax increases.
BetMGM and Hard Rock Bet are implementing wager minimums, effective immediately. BetMGM’s new policy requires customers to stake at least $2.50 on a wager, while Hard Rock Bet set a $2 minimum.
This is a new approach for Illinois sportsbooks, but it comes on the heels of DraftKings, Fanatics and FanDuel instituting $.25-.50 per-bet transaction surcharges.
Varying approaches
The new wager minimums are to address the first-of-its-kind per-bet tax that went into effect in Illinois on July 1.
Illinois sportsbooks are now required to pay $.25 on each of its first 20 million transactions annually and $.50 for every transaction once that threshold had been reached. Based on last year’s data, the new tax would’ve resulted in more than $150 million in additional tax payments on top of the $370 million the state received from Illinois sports betting operators.
The wager minimums reduce the strain of these taxes by making them a lower percentage of the total cost. For example, a $.25 fee is 25% of a $1 wager. However, it is only 10% of a $2.50 bet.
BetMGM sent a message to its customers in Illinois outlining the new policy.
“This change will be applicable to all wager types – including, but not limited to, straight bets, parlays, same game parlay and round robins. This will also include bonus bets, bonuses or any tokens having minimum bet requirement of $2.50.”
Sportsbook operators are not just dealing with the per-bet tax. Illinois last year approved an increase from a flat rate of 15% to a sliding scale of 20% to 40% of gross gaming revenue.
What’s next for Illinois?
Even after responses from five sportsbooks, Illinois officials have not given any indication they will repeal the per-bet tax or lower its overall tax rate on sports betting. DraftKings, Fanatics, and FanDuel have promised to remove their per-bet surcharges if Illinois removes its per-bet tax.
After DraftKings announced that it might add a surcharge in "high-tax" states like Illinois, eventually pulling back after receiving negative feedback, DraftKings CEO Jason Robins said it would not worsen its odds to counter high tax rates.
"I know there's maybe benefit to hiding [the surcharge], because many people don't notice, but I think over the long-term, customers appreciate transparency and even if they don't love that, their state implemented a high tax and some of that is being passed along. I think they prefer that to not knowing if it were buried in the pricing or something.”
Illinois’ remaining sports betting operators – Caesars, bet365, BetRivers, Circa and ESPN Bet – have not said how they will respond to the increased taxes in Illinois, according to Legal Sports Report,
Changes could soon be coming again to the Illinois gaming market.
The Illinois Gaming Board earlier this year approved a proposal that was published in the July 11 edition of the Illinois Register to ban credit card deposits. Public commentary on the matter can be provided until Aug. 25.
If approved, sportsbook customers would not be allowed to use lines of credit to fund their accounts.