Summary: The new Governor of Illinois, J.B. Pritzker, has decided to place sports betting revenues in his recently submitted budget proposal.
Sports betting is on the mind of almost every state in the US. Since mid-May 2018, states in the nation have had the ability to legalize the industry, as long as legislation is passed, and regulations are created. Several states have already completed the legalization process and now offer sports betting services within their borders. It seems Illinois is considering the option, with the incoming Governor J.B. Pritzker adding revenues from the new industry within his recently submitted budget proposal.
Pritzker included sports betting within his proposal, allotting $217 million from sports betting during the fiscal year 2020. The total is based on licensing, of which the state would offer 20 options for sports betting. The prize per license is set at $10 million each.
The price point is the same as what was done in Pennsylvania. Following a similar format might be successful, but operators will have to be willing to fork over the cash in order to be involved in the brand new industry. Pritzker would like to see 20% paid in taxes on gross revenues from sports betting, which is also a high percentage when considering other states settings.
In his proposal, the governor called on legislature to take up the idea of sports betting immediately so that the state can begin to see the hundreds of millions of dollars the industry can provide along with job creation and regulating the activity to protect citizens in the state from bad actors.
The governor feels that acting quickly will allow the state to realize over $200 million in fees and taxes for the upcoming fiscal year.
In his proposal, the governor was not shy about what he wanted to see happen regarding sports betting as the details are quite specific. Players would be able to enjoy in-person sports wagering along with mobile options while located only in the state. The governor left the option open for interstate wagering by allowing jurisdictions where an agreement has been made with the state.
Tax revenues from sports betting would go towards the State Gaming Fund. Operators will have to pay an annual interactive licensing fee of $5,000 for renewal. During the first five years of operation, those who licensed will be able to deduct as much as 90% of 1/5 of the initial $10 million fee for licensing from the sports wagering tax amount.
In his proposal, Pritzker stated that he feels the industry would bring from $384 million to $680 million in gross revenues each year with full implementation. The governor quoted estimates provided by Oxford Economics. This amount would create around $77 million to $136 million in tax revenues based on the 20% tax.
According to Legal Sports Report, Representative Mike Zalewski plans on introducing a bill involving sports betting. Legislators will now have to find a way to create legislation that meets what the governor is asking for in the budget. Lawmakers will have to create a bill that will meet the governor’s wants and Zalewski feels it can be done.
During March and April, hearings are scheduled to take place involving lawmakers and stakeholders in the sports betting industry. During these meetings, the tax rate as well as licensing structure will be discussed. A bill should be finalized by May if all goes according to plan.
It will certainly be interesting to watch as the process unfolds. In a few months, the state may join the growing number in the US that have legalized sports betting services.