A new amendment would allow Illinois sports betting operators to deduct promotional spend from adjusted gross revenues before applying state tax.
State Rep. Bob Rita, who also filed the online casino bill, introduced the amendment last week.
The promotional deduction would not start until 2023, but it could have significant industry implications.
What effect would this have on tax dollars?
The amendment would certainly be a win for operators, as they would pay much less in taxes over the long haul.
On the flip side, the state would not make as much in sports betting tax dollars.
Illinois is already the No. 4 sports betting market in the US. And, as it matures, will continue to see growing handle and revenue figures each month.
In December, Illinois reported $491.7 million in handle and profited $28.4 million. That resulted in $3.6 million in tax revenue for the state.
By 2023, those first two numbers will be higher. However, as for the third, it depends on what happens with this legislation.
Currently, sports betting revenues are taxed at 15% in Illinois.
The tax rate wouldn’t change, but the taxable amount would.
Let’s compare Colorado sports betting taxes
Colorado is a state that deducts promotional spend from adjusted gross revenue. The result?
It is much less tax money for the state.
Let’s use December as an example. In that month, Colorado’s gross gaming revenue was $17.2 million.
But its “net betting proceeds,” otherwise known as taxable revenue, was just $5.7 million.
That came out to $531,490 in state tax.
Colorado’s sports betting handle in December was $284.6 million. So, while it’s not Illinois, it’s in the same ballpark.
Illinois doesn’t currently include bonus bets in its revenue report, but Colorado does. For reference, CO recorded $10.8 million in free December bets.
How much tax revenue has Illinois sports betting generated?
As of this writing, which doesn’t include January’s numbers, sports betting has generated $20.1 million in tax revenue for the state.
Here’s the full breakdown:
| Licensee | Total Handle | Online Handle | Retail Handle | Total Revenue | Total Tax | Total Wagers | Online Wagers | Retail Wagers |
|---|---|---|---|---|---|---|---|---|
| Total | $1,873,340,999.66 | $1,790,771,689.87 | $82,569,309.79 | $125,054,113.19 | $20,119,455.80 | 52,340,735 | 51,315,967 | 1,024,768 |
| BetRivers Sportsbook | $642,468,658.19 | $591,453,859.49 | $51,014,798.70 | $47,028,215.63 | $7,664,802.46 | 12,326,971 | 12,006,115 | 320,856 |
| DraftKings at Casino Queen | $615,274,059.77 | $607,023,506.07 | $8,250,553.70 | $31,833,102.36 | $5,099,205.03 | 20,640,901 | 20,497,332 | 143,569 |
| FanDuel Sportsbook | $446,373,607.37 | $445,610,451.12 | $763,156.25 | $32,652,174.03 | $5,244,227.64 | 17,039,777 | 17,029,310 | 10,467 |
| PointsBet Sportsbook | $127,872,024.99 | $127,071,280.19 | $800,744.80 | $9,788,307.66 | $1,540,760.58 | 1,610,803 | 1,601,259 | 9,544 |
| William Hill Sportsbook | $23,189,174.95 | $19,612,593.00 | $3,576,581.95 | $1,776,965.00 | $274,157.81 | 208,706 | 181,951 | 26,755 |
| Sportsbook at Argosy Casino Alton (retail only) | $11,079,386.93 | $- | $11,079,386.93 | $1,000,635.18 | $150,095.27 | 337,348 | 0 | 337,348 |
| Sportsbook at Hollywood Casino Joliet (retail only) | $3,833,928.70 | $- | $3,833,928.70 | $455,543.84 | $68,331.58 | 93,779 | 0 | 93,779 |
| Sportsbook at Hollywood Casino Aurora (retail only) | $3,250,158.76 | $- | $3,250,158.76 | $519,169.49 | $77,875.43 | 82,450 | 0 | 82,450 |
Colorado, for comparison, has generated less than $3 million in state taxes. The deduction isn’t the only factor in play, but it’s a big one.
In October, Illinois raked in the most tax dollars at $6.8 million, despite a lower handle than in December.
That can mostly be attributed to a good month for the sportsbooks, as publicly-backed teams struggled.
Could Illinois also have online casinos by 2023?
As previously mentioned, Rita also filed a bill last week that would legalize online casinos in Illinois.
As far as state tax revenue is concerned, online casinos have the potential to be a much bigger driver than sports betting, with or without a promotional spend tax deduction.
The bill, titled the Internet Gaming Act, would bring online slot machines, online table games and online poker to the Prairie State.
