Campaign for Fairer Gambling Says Sportsbook Firms Using ‘Dubious Claims’ in Illinois

Posted on: May 24, 2024, 04:54h. 

Last updated on: May 24, 2024, 04:54h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Illinois Gov. J.B. Pritzker (D) is pushing to boost the state’s sports betting tax to 35% from 15% to raise needed cash and that’s not to the liking of the gaming industry, which one group says is employing “dubious claims” in a bid to defeat the governor’s plan.

Illinois casinos felon JB Pritzker
Illinois Gov. JB Pritzker signs a bill in August 2023. The Campaign for Fairer Gambling (CFG) says “dubious” tactics are being used in the fight against Prizker’s attempt to raise sports betting taxes. (Image: AP)

The Campaign for Fairer Gambling (CFG), an independent wagering reform group, asserts that in its effort to ward off Pritzker’s proposal of higher taxes on sports wagering, the Sports Betting Alliance (SBA) is using tired practices and “has not substantiated its claims.”

It’s no feat of strength to push a fantastical narrative, then collect signatures and proclaim a mandate,” said CFG founder and funder Derek Webb in a statement. “Global gambling conglomerates are expert at positioning sports betting as a foot in the door before the real floodgates inevitably open. Sports betting often serves as a gateway to slots and table games down the line, because they bring in even more revenue — not to mention harm.”

CFG believes that signatures collected in a petition drive orchestrated by SBA may have been acquired under false pretenses. Among gaming companies, the Sports Betting Alliance is supported by BetMGM, DraftKings, FanDuel, and Penn Entertainment, among others.

CFG Refutes SBA’s New York, Pennsylvania Comps

Should Illinois implement a 35% levy on sports wagering, it’d be the third-highest rate in the country among large states trailing only Pennsylvania (36%) and New York (51%). Last year in Illinois, bettors wagered $11.6 billion at the state’s online and retail sportsbooks with operators generating a hold of 8.6%, sending receipts of $150 million to the state.

That 8.6% hold is slightly above the national average of 8.4% highlighted by CFG, but the group believes SBA’s claims that odds offered to bettors and thus hold would be adversely affected by higher Illinois taxes. CFG says that scenario hasn’t played out in New York.

“New York’s higher tax rate has not affected hold, which would shift if odds shifted. This is a direct refutation of SBA’s claim that higher taxes would lead to worse odds for players,” observed CFG.

Delaware, New Hampshire, and Rhode Island also tax sports wagering at 51%.

iGaming Pitched as Alternative to Sports Betting Tax Hike

Though not directly mentioned by CSG, SBA members have offered up iGaming as a compromise to Pritzker’s proposed sports wagering tax increase. The gaming companies believe that online casinos would unleash a new revenue stream for Illinois.

A recent study by SBA noted that land-based casino revenue in Illinois, Louisiana, Maryland, New York, and Virginia would modestly increase if iGaming was permitted in those jurisdictions. That was likely an effort to allay fears that online casinos could cannibalize brick-and-mortar counterparts.

While SBA claimed iGaming would create $750 million in new revenue for Illinois, or more than triple the amount that would be raised from increasing the sports wagering tax, the state isn’t rushing to advance online casino legislation.

Still, Illinois needs cash. For the fiscal starting July 1, the state is expected to have a budget deficit of $891 million, or $721 million when accounting for a $170 contribution to the “rainy day” fund. That would mark the state’s first deficit in four years. Pritzker’s most recently proposed budget calls for $52.7 billion in spending, up from $40 billion in 2019.