Sports betting stocks slide after Illinois lawmakers approve tax hike

Each chambers of Illinois’ state legislature handed a price range that features a tax of 25 cents per wager on the primary 20 million on-line sports activities bets made every fiscal yr, rising to 50 cents per wager after.

Illinois Gov. J.B. Pritzker issued an announcement saying he would signal the price range, in accordance with native information experiences.

Truist analyst Barry Jonas referred to as the duties a last-minute shock, including that it is the second straight yr of the state slapped an sudden tax on the business. Underneath the most recent plan, Jonas stated Illinois’ price will likely be among the many highest within the nation.

Jonas stated DraftKings and Flutter’s FanDuel ought to each “definitely” surpass 20 million wagers, which means they’re going to face the upper tax price on a portion of their bets.

However Jonas referred to as the influence for smaller opponents available in the market extra “modest.” Nonetheless, shares of MGM Resorts, which owns the BetMGM platform by means of a 50/50 three way partnership with Entain, declined 1.5%. Penn Leisure, companions within the ESPN Guess platform, shed 0.3%.

Now, Wall Road is left questioning if different states will comply with Illinois’ lead and try to plug their price range deficits by both adopting or rising on-line sports activities playing taxes.

Statewide levies on digital sports activities bets in the beginning of 2024 ranged from 51% in New Hampshire, New York and Rhode Island to six.75% in states like Nevada and Iowa, in accordance with a report from the Tax Basis. Solely 27 states and D.C. permit on-line sports activities betting statewide, in accordance with the nonprofit.