July 2024 Changes to the Illinois Sports Wagering Tax

Illinois Governor JB Pritzker’s signing of HB 4951 made significant changes to the sports wagering tax. These changes become effective July 1, 2024.

Thirty-three states currently impose a type of sports wagering tax. Most states follow a flat percentage tax system, where the tax is equal to a set percentage of a licensee’s gross receipts, regardless of the gross receipts totals. Prior to July 1, 2024, Illinois imposed a 15% tax on adjusted gross receipts (wagering receipts, less winning payouts).

Starting July 1, 2024, Illinois will implement a bracket system, where the sports wagering tax will be based on various gross receipts ranges, or brackets. The applicable rates, ranging from 20% to 40%, increase corresponding with the range of adjusted gross receipts with a maximum 40% rate for annual adjusted gross receipts in excess of $200 million.

Illinois is also adopting two new reporting obligations seldom seen in other states. Annually, licensees must submit an audit of their financial transactions and condition statement of their operations. Additionally, every fiscal year, within 90 days after the end of each fiscal quarter, licensees must submit a compliance report on procedures (determined by the Illinois Gaming Board). To best meet the standards of the State for their new reporting obligations, as well as to be able to best determine their new tax liabilities, licensees should exercise diligent recordkeeping and documentation preservation.

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.