Gaming Analyst Warns Illinois Tax Hike Will Have Consequences

According to Brendan Bussmann, a gaming industry consultant who is a managing partner at B Global, increased taxes on online sports betting in Illinois may cause other states to do the same, which could ultimately ruin the product and send gamblers to offshore sites. 

Illinois Tax Hike Sparks Concerns of Contagion Across US States

In an investor note from Truist Securities, Bussmann opined that this tax increase would mean offering a worse product with less innovation, poorer odds, and fewer promotions for customers in Illinois.

This move makes Illinois the second state after Ohio to increase taxes on gambling. Brendan Bussman believes Ohio Gov. Mike DeWine’s stance against internet gambling influenced why the state raised taxes so much so fast. Bussman believes that the next in line to do the same will most likely be Massachusetts.

Despite the estimated $200 million additional revenue for Illinois through the new tax levies, Bussman thinks that it would come at a cost. He believes that the tax hike will benefit non-taxpaying offshore operators. 

International investors have become concerned over a potential “contagion factor” among US states that have not yet legalized iGaming such as New York where rates were set higher at the start. 

Bussmann Bullish on iGaming Prospects in Illinois and the Rest of the US

Despite all of these apprehensions, Bussmann is bullish on the future of iGaming in Illinois and beyond. He points out that at some point in time, it will be legalized in Illinois, given the state’s history of using other forms of gambling repeatedly to raise tax revenue.

Speaking about licensing casinos across New York City, Bussmann suggested that the priority may switch back and forth which may promote the legalization of online gambling in New York before the land-based casinos. This will offer the state revenue until the land-based process is completed.

In other news, Michigan has issued a cease-and-desist letter to offshore online sports betting platform Bovada, becoming the latest state to take action against the illegal market. Bussmann applauded the move, highlighting the need for a coordinated effort between states and the federal government to tackle the black market.

Among states to watch for gaming expansion, Bussmann highlighted Minnesota, Georgia, Missouri, California, and Texas. While some of these states are likely to face challenges and delays, Bussmann remains optimistic about the potential for growth and expansion in the gaming industry.