{"id":320991,"date":"2024-05-28T10:53:51","date_gmt":"2024-05-28T15:53:51","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=320991"},"modified":"2024-05-28T11:32:39","modified_gmt":"2024-05-28T16:32:39","slug":"draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/","title":{"rendered":"DraftKings, Flutter Tumble as Illinois Advances Sports Betting Tax Hike"},"content":{"rendered":"

On news that the Illinois Senate approved a budget that includes a near tripling of the state\u2019s tax rate on regulated sportsbook operators, shares of DraftKings (NASDAQ: DKNG) and Flutter (NYSE: FLUT) tumbled Tuesday.<\/p>\n

\"DraftKings
A DraftKings billboard appears at Times Square in New York City. The stock and that rival Flutter Entertainment plunged today on news Illinois is likely to increase its sports betting tax. (Image: NASDAQ)<\/figcaption><\/figure>\n

In the first trading day since the fiscal 2025 budget advance through the Illinois Senate, DraftKings is off nearly 12% in midday trading while shares of FanDuel parent Flutter are lower by 6.6%. Should Gov. J.B. Pritzker (D) approve the budget as expected, sportsbook operators in the state would be subject to a new progressive tax effective July 1 with revenue leaders being taxed at up to 40% and smaller firms paying 20%. Those are dramatic increases from the state\u2019s current sports wagering tax rate of 15%.<\/p>\n

Earlier this year, Pritzker proposed<\/a> boosting the sports betting tax to 35%. At the high end of 40%, large sportsbook operators doing business in Illinois would be subject to a levy that would be the second-highest in the country, eclipsed only by Delaware, New Hampshire, New York, and Rhode Island. The sports betting tax in those states is 51%. The Sports Betting Alliance (SBA), an industry trade group, warned Illinois\u2019 new policy will lead to worse odds and products for bettors and potentially drive business to unregulated offshore sportsbooks.<\/p>\n

Rather than heeding the cry from tens of thousands of residents who vocally opposed more than doubling sports betting taxes, the Illinois Senate advanced a budget that would make the Illinois sports betting tax the second-highest in the country and counterproductively penalizes sports betting operators who invested millions into local economy and created jobs in the state,\u201d said SBA President Jeremy Kudon in a statement.<\/p><\/blockquote>\n

In a note out earlier today, research firm BTIG estimated that the new tax rates DraftKings and Flutter<\/a> will be subject to in Illinois are 36% and 37%, respectively.<\/p>\n

Michigan, New Jersey Could Follow Illinois, Turn Punitive<\/h2>\n

In a report to clients on Tuesday, Deutsche Bank analyst Carlo Santarelli said the Illinois tax hike isn\u2019t \u201coverly draconian for the operators, and of little consequence to the majority of the operators in the state.\u201d<\/p>\n

\n

However, he cautioned that other cash-strapped states could be inspired by the move in Illinois and be compelled to boost their own sports wagering taxes. Santarelli observed that owing to currently accommodative rates<\/a>, Michigan and New Jersey could eventually implement \u201cpunitive\u201d increases to their sports betting levies.<\/p>\n<\/div>\n

Santarelli also mentioned Arizona, Indiana, Iowa, Kansas, and Massachusetts as potential boosters of sports wagering taxes. Massachusetts recently tried to go to 51%, but that effort was quickly quashed and appeared poorly timed because it emerged just days after officials in the state boasted about hauling in $1.8 billion in revenue from a tax on the state\u2019s most affluent residents.<\/p>\n

In a report out Tuesday, Morgan Stanley said DraftKings and Flutter can trim marketing and promotional spending in Illinois to offset some of the headwinds caused by the elevated tax while adding the new policy creates an overhang for the operators.<\/p>\n

Constructive Views on Illinois Sports Betting Tax Increase<\/h2>\n

FanDuel and DraftKings operate in duopoly fashion across the US. As such, they have the brand awareness, client rolls, and financial resources to potentially prove sturdy in the face of increasingly unfavorable tax policy.<\/p>\n

\n

Oppenheimer analyst Jed Kelly told clients the two operators could leverage rising taxes to advance consolidation, adding that unfavorable legislative outcomes are buying opportunities in DraftKings. He rates the stock \u201coutperform\u201d with a $60 price target, implying upside of 71.8% from current levels.<\/p>\n<\/div>\n

Needham analyst Bernie McTernan noted ESPN Bet parent Penn Entertainment (NASDAQ: PENN) and Rush Street Interactive (NYSE: RSI) are likely to see their taxes fall in Illinois<\/a> due to lower market share and revenue in the state.<\/p>\n","protected":false},"excerpt":{"rendered":"

On news that the Illinois Senate approved a budget that includes a near tripling of the state\u2019s tax rate on regulated sportsbook operators, shares of DraftKings (NASDAQ: DKNG) and Flutter (NYSE: FLUT) tumbled Tuesday. In the first trading day since the fiscal 2025 budget advance through the Illinois Senate, DraftKings is off nearly 12% in […]<\/p>\n","protected":false},"author":46,"featured_media":261549,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,86430,86438,13592,1074],"tags":[81903,86455,86457,81895,80968],"acf":[],"yoast_head":"\nDraftKings, Flutter Pinched By Illinois Sports Betting Tax Hike<\/title>\n<meta name=\"description\" content=\"DraftKings, Flutter Tumble as Illinois Advances Sports Betting Tax Hike.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DraftKings, Flutter Pinched By Illinois Sports Betting Tax Hike\" \/>\n<meta property=\"og:description\" content=\"DraftKings, Flutter Tumble as Illinois Advances Sports Betting Tax Hike.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-05-28T15:53:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-05-28T16:32:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/02\/mo_042420002.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1012\" \/>\n\t<meta property=\"og:image:height\" content=\"675\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/\",\"url\":\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/\",\"name\":\"DraftKings, Flutter Pinched By Illinois Sports Betting Tax Hike\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/02\/mo_042420002.jpeg\",\"datePublished\":\"2024-05-28T15:53:51+00:00\",\"dateModified\":\"2024-05-28T16:32:39+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"DraftKings, Flutter Tumble as Illinois Advances Sports Betting Tax Hike.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-flutter-pinched-by-illinois-sports-betting-tax-hike\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/02\/mo_042420002.jpeg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/02\/mo_042420002.jpeg\",\"width\":1012,\"height\":675,\"caption\":\"A DraftKings billboard appears at Times Square in New York City. 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