Legalizing Sports Betting Could Generate $100 Million in Tax Revenue in Illinois

new report by the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign finds that legalizing and taxing sports betting could create 2,500 jobs and increase state tax revenue by about $100 million annually.

After the landmark Murphy v. National Collegiate Athletic Association Supreme Court decision in May 2018 paved the way for sports betting across the United States, Illinois lawmakers have debated whether to legalize, tax, and regulate sports betting. As of January 2019, a total of 10 states have passed legislation to legalize sports betting.

Two bills, both called the Sports Wagering Act, were filed in the Illinois General Assembly in 2018. Senate Bill 3432 was introduced by Democratic Senator Napoleon Harris, Ill– who played linebacker in the National Football League– and House Bill 5186 was introduced by Republican Representative Tim Butler. In addition, Governor J.B. Pritzker said during his campaign that Illinois should consider legalizing, taxing, and regulating sports betting.

Now, a new report by the Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign evaluates several proposals to legalize, regulate, and tax sports betting.

If Illinois were to legalize sports betting through the Sports Wagering Act proposed last year, the report finds that net revenues for the gaming industry would increase by $400 million and about 1,800 new jobs would be created at between 30 and 75 licensed locations. The proposed bills would also raise state tax revenue by between $50 million and $120 million per year. However, due to relatively high tax rates, the proposals in the Illinois General Assembly would result in nearly half of all sports betting activity remaining in the black market.

The General Assembly could also choose a more balanced framework that combines the United Kingdom’s 15 percent tax on gross gambling revenues, a $100,000 annual license fee for sportsbooks and related establishments, and a small 0.05 percent “integrity fee” on wagers to ensure compliance and prevent fraudulent activity may offer a way forward.

A balanced sports betting legalization framework would have positive effects on the Illinois economy. It would:

  • increase gaming industry revenues by $565 million annually;
  • create more than 2,500 new jobs at nearly 90 licensed locations in Illinois;
  • shrink the illegal black market for sports betting;
  • enhance state tax revenues by $100 million annually; and
  • fund programs that treat gambling addiction and fund public investments in education and infrastructure.

Allowing Illinois residents and visitors to gamble on sports would spur economic activity, shrink the black market, and generate new state tax revenues. However, the tax revenues from sports betting are not a panacea that will not solve Illinois’ fiscal issues, and should be weighed against the potential costs of gambling addiction.

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Featured Image: Leyla. (2011). “Sportsbook at the Wynn.” Flickr Creative Commons. Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).

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