Illinois’ recently approved sports betting tax has drawn sharp criticism from the Sports Betting Alliance (SBA), a trade group representing major sportsbook operators. While operators had initially cautioned that customers would ultimately bear the cost, the SBA is now openly condemning the measure.
The new law imposes a $0.25 tax on each of the first 20 million bets placed annually by an operator, and $0.50 per wager thereafter. According to the SBA, this structure is not only likely to be deeply unpopular with bettors, but will also erode the state’s competitive, regulated market.
Impact on Small‑Dollar Bettors
“Data shows the state’s new per‑wager tax will have the most impact on recreational bettors in Illinois who place small‑dollar wagers, with more than half of bets placed in Illinois at $5 or less,” the SBA said. The group warned that these players may turn to illegal, unregulated sportsbooks offering more favorable terms — operators that lack licensing, oversight, and consumer protections such as age verification.
Reduced Revenue, Shrinking Market
Rather than increasing state tax revenue, the SBA argues, the policy will drive customers away from legal platforms, ultimately shrinking the betting handle and reducing tax collections. To offset the new costs, sportsbooks may be forced to set minimum bet amounts, offer less favorable odds, or add surcharges to each wager — or some combination of all three.
Industry Response
Major operators including DraftKings, Fanatics, FanDuel, Circa Sports, ESPN Bet, and BetMGM have been experimenting with new market strategies. But the SBA predicts these efforts will be undermined by the tax’s chilling effect on overall betting volume.
“Unregulated, offshore operators offer cheaper sports betting alternatives for consumers, without any consumer protections — including age verification — and without any oversight,” the SBA concluded.
