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Illinois lawmakers have passed a $55.2 billion budget for the next fiscal year, which includes a new tax on every sports betting wager placed in the state.

The budget was passed late on May 31, the last day of the 2025 legislative session. It now heads to Illinois Gov. J.B. Pritzker’s desk for a signature.

The governor has indicated he will sign the budget. He even praised it as the “seventh consecutive balanced budget that continues to get the state’s finances back on track.”

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The approved budget includes an anticipated $800 million in increased tax revenue. With Gov. Pritzker indicating he would veto a budget with an increase in tax on individuals, corporations, or the sales tax, lawmakers targeted industries like sports betting to raise funds.

Under the new tax, operators will pay 25 cents on the first 20,000 bets placed on their platforms. After that threshold, the tax increases to 50 cents per bet. Estimates are that this initiative will bring $36 million annually.

Industry analysts, such as Truist analyst Barry Jonas and Jefferies analyst David Katz, suggest that the tax increase will have the most significant impact on DraftKings and FanDuel.

Katz also warns that operators might pass the increased costs to bettors through higher minimum bets. That could drive them to alternative platforms like Kalshi, a market prediction site which recently received a cease-and-desist letter from the Illinois Gaming Board.

The new tax increase has come as a surprise to operators. Lawmakers introduced it on the last day of the legislative session, giving them little time to respond.

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Once Gov. Pritzker signs the budget, it will mean that Illinois sportsbooks will incur a second tax hike in a year. In 2024, Illinois introduced a graduated tax system:

• 20% for annual revenue of $0 to $30 million
• 25% for those generating $30 to $50 million
• Those with revenue between $50 million and $100 million pay 30%
• 35% for operators with annual revenue of $100 million to $200 million
• Over $200 million: 40%

Additionally, operators pay separate taxes for their retail and online sports betting operations. Before the 2024 increase, operators paid a flat 15% tax. As with the new tax hike, the most affected by the 2024 tax hike were DraftKings and FanDuel. The two market leaders saw their tax rate increase from 15% to 40%.

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While lawmakers were scrambling to find an additional revenue source, one potential source went unnoticed: the legalization of online casinos.

Mirroring efforts in 2023, Rep. Edgar González, Jr. and Sen. Cristina Castro introduced companion bills, known as the Internet Gaming Act, to legalize iGaming in the state.

Some estimates suggest that if legalized, online casinos could generate $450 million in tax revenue in their first year, which is over 10 times the estimated tax revenue for new sports betting.

Over time, that figure could reach $800 million. That is comparable to the iGaming market in Pennsylvania, which has a slightly higher population, a mature market, and an aggressive tax system.

Despite these projections and a signal from Gov. Pritzker that he would be open to the idea, the 2025 Internet Gaming Act failed to gain traction and advance past the committee stage.

Illinois Fails to Ban Sweepstakes Casinos

The end of the 2025 Illinois legislative session also means that sweepstakes casinos remain legal in Illinois.

In April, the Senate Gaming, Wagering, and Racing Committee inserted an amendment to a bill that targeted unlicensed retail sweepstakes machines, including online sweepstakes, which directly affected sweepstakes casinos.

Illinois is one of 12 states that introduced bills to ban the social gaming platforms. However, so far, only Montana has passed an official ban.