Gilbert Villegas, chairman of the Economic, Capital, and Development Committee for the 36th Ward in Chicago, has written in the Chicago Tribune regarding the proposed Chicago sports betting tax and has expressed strong opposition.
Key Takeaways
- Villegas said the increase of sports betting taxes earlier this year in Illinois has already led to the decline of sports wagers.
- He claims the new betting tax could be challenged by bettors in court.
- Alternative suggestions to grow the city’s economy made by Villegas include engaging and developing sustainable budget solutions by winning support.
After Illinois has raised sports betting taxes twice in the past year, with one introduced earlier this year adding a per-wager tax of 25 or 50 cents, leading to a decline in sports betting in the state, Villegas has warned Chicago that if it adds a sports betting tax, it could drive away sports bettors from Illinois legal betting sites.
Additionally, he claims the sports betting tax can be challenged in court by bettors, with the possibility of the tax being found invalid. The lawsuit could mirror the case when the Illinois Supreme Court struck down the tax Chicago attempted to impose on people who used StubHub.
Villegas called Chicago's proposal clumsy, and said it could run the risk of alienating the city from officials that Chicago needs support, and could cause state leaders to pre-empt Chicago in relation to other taxes where coordination is required.
He describes how Chicago needs support from other cities, such as Springfield, in times of economic uncertainty, and the introduction of the taxes could cause division.
Suggestions made by Villegas included collaboration and coordination with communities, state officials, and business leaders, rejecting what he calls “facile solutions that are mirages,” including sports betting tax increases, and instead engaging in developing and winning support for sustainable and predictable budget solutions.
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Missouri sports betting taxes compete with Illinois
After Missouri launched its sports betting earlier this month, its sports betting taxes have caused a new kind of competition with neighbouring state Illinois.
As Missouri sports betting launched with 10% taxes for its betting operators, compared to Illinois, which launched at 15%, then changed to a progressive rate of 20-40%, and has now added a per-wager tax, the Missouri launch could impact its revenues.
The CEO of Circa Sports, which now operates in both states, commented that he believes bettors will begin to travel west to Missouri to place their bets to avoid the per-wager taxes that sports betting operators have now passed onto consumers.
While Illinois wagering saw a 12% year-over-year growth in July, when the per-wager tax was introduced, it experienced a 15% year-over-year decline in September.
Additionally, DraftKings at Casino Queen in East St. Louis has expressed that they may see a drop in the number of Missourians who use its parking lot to place bets on its app, but it also expects customers who come inside to remain loyal.
Overall, the lower state taxes in Missouri could create competition for Illinois, with the total impact expected to be seen in the coming months.
