C’mon, people
Wednesday, Jun 5, 2024 - Posted by Rich Miller
* Capitol News Illinois…
Like in many other states, DraftKings and FanDuel have cornered roughly three-quarters of Illinois’ sports betting market. […]
Despite other states taking similar steps to Illinois, the companies threatened to push the nuclear button in the final days of session, with a source close to DraftKings and FanDuel telling Capitol News Illinois that “all options are on the table, including withdrawing from the state.”
Yeah, they’re gonna leave all that money behind. But if they do, then what happens, other than maybe we don’t have to watch their endless TV ads on local stations?
They basically don’t directly employ anyone in Illinois aside from lobbyists, so layoffs wouldn’t be a problem, except for the lobbyists. But they’re some of the most resilient people I know.
And if they did leave Illinois, the smaller operators could expand and/or rush in to fill the void. One thing those two huge companies definitely don’t want to see is the smaller operators gaining a foothold anywhere. If that happened, the smaller outfits might build up strength and then expand into other states, which could damage the sportsbook duopoly.
* And the Illinois tax increase is definitely tilted in favor of the smaller companies. Center Square…
The original plan would have increased the tax from 15% to 35%. A new tiered plan would tax sportsbook operators at 20% if their earnings are below $30 million, but 40% if their earnings are above $200 million.
Sports betting companies said if signed into law, higher taxes would mean worse odds and fewer promotions for users. The companies also warn the tax hike may drive all but the top three sportsbooks out of Illinois.
Wait, what? Now somebody is saying that the smaller operators are gonna leave? Which is it?
* As we’ve discussed before, perhaps the biggest issue here is tax “contagion.” Some other states have kept their tax rates low, so they’ll likely look at what happens in Illinois…
Brendan Bussmann of B Global, a consultancy serving the gaming, sports and hospitality industries, has now tabled further concerns through a note from Truist. These primarily relate to the knock-on effect the increase could have, saying further states could follow suit with similar increases.
“With Illinois the second state to increase its tax rate [after Ohio raised its rate from 10% to 20% in 2023], investors have an increased concern around contagion,” Bussmann said.
- DuPage Saint - Wednesday, Jun 5, 24 @ 12:33 pm:
Maybe cut the tax rate if they promise to only advertise in print media and stay off the airwaves. Make same deal with Kars fo Kids
I don’t under how all these companies and sports teams will all go out of business or move if they don’t get state aid. If they are that poorly run they should go out of business
- Donnie Elgin - Wednesday, Jun 5, 24 @ 12:39 pm:
“They basically don’t directly employ anyone in Illinois aside from lobbyists, so layoffs wouldn’t be a problem”
DK has a nice big Sports book/bar/restaurant next to Wrigley
- Politix - Wednesday, Jun 5, 24 @ 12:41 pm:
Billionaires crying poor again.
- Dan Johnson - Wednesday, Jun 5, 24 @ 12:48 pm:
I am starting to hear bad stories of people losing way too much money on these apps. We should probably define a problem gambler as something like losing more than 10% of your weekly wage so people have an objective assessment whether they are getting addicted or otherwise just spending too much. Who is going to say “I have a problem so I’m calling the 800 number”? That requires someone to self-assess they have a problem. It would probably be better if people could use those services without them having to self-identity as having a problem just that they’ve gone past the reasonable or suggested income limit of 1% (or whatever the experts say) and maybe they could use some free help to quit digging a financial hole.
- Bentoh's - Wednesday, Jun 5, 24 @ 1:16 pm:
I only gamble in small batch, artisanal, local owned type places myself but it sure is hard to believe that the tax rate on earnings above $200mm is going to chase any rational economic actor out of the state.
- Dotnonymous x - Wednesday, Jun 5, 24 @ 1:16 pm:
Those who exploit magical thinking gamblers depend on losers…do realize?
- Dotnonymous x - Wednesday, Jun 5, 24 @ 1:19 pm:
“Who is going to say…”
Ask their Wives and Kids?
- Time - Wednesday, Jun 5, 24 @ 1:23 pm:
Possible to tax gambling even higher and lower taxes on weed? That would be nice. If only state weren’t so deep in the hole..
- Homebody - Wednesday, Jun 5, 24 @ 1:38 pm:
Given how little revenue is made at brick and mortar sportsbooks, I bet the Wrigley location makes more money off food and beverage than the actual sportsbook.
- @misterjayem - Wednesday, Jun 5, 24 @ 1:57 pm:
“DK has a nice big Sports book/bar/restaurant next to Wrigley”
And that space would stay empty for exactly as long as it takes to change the signage.
– MrJM
- Lincoln Lad - Wednesday, Jun 5, 24 @ 2:18 pm:
The better promotions went away after they established a client base… the number of players means they’re not going anywhere. I like the graduated tax plan… it makes sense to me.
- ArchPundit - Wednesday, Jun 5, 24 @ 2:18 pm:
We were better off when barbers ran this business. Can we just license barbers to have their license include sports betting and kick out the big guys.
- Lurking Librarian - Wednesday, Jun 5, 24 @ 2:48 pm:
Saw a former good friend ruin their life and hurt a lot of people because of a gambling addiction (slots). I can’t imagine how many families are hurt and end up needing social services because of the damage this addiction causes. Hopefully the taxes these businesses pay can help repair some of the damages to society that they have caused.
- Flyin'Elvis'-Utah Chapter - Wednesday, Jun 5, 24 @ 2:53 pm:
Leave it to Donnie Elgin to equate a bar’s economic impact with that of having three quarters of sports book in the 6th most populated state.
Lucky Pierre would be proud.
- Captain Obvious - Wednesday, Jun 5, 24 @ 8:55 pm:
My only objection to this tax increase is that it is still more generous to the sportsbooks than it should be. Someone mentioned the weed tax. It is also far too low. Both rates could be much higher. Gamblers and stoners will pay the price. Not like they’re going to quit.