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REGULATION
massive leg up when competing for customers . We shouldn ’ t be driving back customers to dangerous bookies and illegal offshore operators . That will mean less – not more – tax revenue for the state in the long run .”
Truist analysts wrote in a note shortly after the legislature voted that they also see potential danger ahead .
“ One aspect of the Alliance response we ’ d echo is that we think states are underestimating the prevalence of the illegal markets , which onshore operators compete with fiercely .
“ We conducted a recent survey of online sports betting players , which showed 31 % of respondents bet offshore , although 71 % of VIPs do . That stat is in line with prior data we ’ ve featured from Juice Reel that shows offshore books see 18 % of the platform ’ s total tracked bets , although 46 %/ 50 % of online sports betting handle / revenues .”
“ VOLATILE ” TAX RATES MAKE DOING BUSINESS TOUGH
Last year in Ohio , DeWine was the architect of a new law that increased the wagering tax from 10 % to 20 %. New Jersey lawmakers are contemplating an increase – from 13 % to 30 %. In early June Massachusetts lawmakers shot down the idea of hiking taxes from 20 % to 51 %.
The changing landscape could make it difficult for operators to commit to certain states .
“ Operators need to budget when they enter a state ,” Brian Wyman of Innovation told iGB . “ For the state to go from 15 % to 35 %, it makes it impossible for operators to pay fair prices to their suppliers and they can ’ t pay high licensing fees . If the rules of the game are so volatile and everyone is waiting for the ‘ other side ’ to do something different , that ’ s not
“ With Illinois the second state to increase its tax rate , investors have an increased concern around contagion ”
Brendan Bussmann , B Global Advisors
a good way to do business . You ’ re
going to see a backlash as other states come on .”
Illinois operators have already paid high licensing fees – it cost $ 10m to get into the state tethered to a casino or pro sports venue .
According to consultant Brendan Bussmann of B Global , it ’ s possible that other states could follow Illinois and Ohio . “ With Illinois the second state to increase its tax rate , investors have an increased concern around contagion ,” he said .
DRAFTKINGS , FANDUEL HAVE MADE CAPITAL INVESTMENTS
As budget negotiations were going on in Illinois , it was reported that DraftKings and FanDuel might reconsider their presence in the state . Dating to 2019 , when sports betting was legalised , it has seemed as if Illinois didn ’ t want them .
The wagering law includes three $ 20m standalone mobile licences intended , it seemed , for companies with no retail footprint . Owners of those licences would have had to wait 18 months to launch , while those tethered to casinos were able to launch sooner .
At the time , neither DraftKings nor FanDuel was much in the brick-andmortar sportsbook business . But both partnered and invested in existing businesses in order to launch sooner . Five years later , there is a DraftKingsbranded sportsbook at Wrigley Field and a FanDuel-branded sportsbook at the United Center . DraftKings also has a retail sportsbook at the downstate Casino Queen and FanDuel has a physical location at Fairmount Park .
Wyman said it would seem that lawmakers would want to give “ preferential treatment ” to companies that invest in a state . Illinois is not the first place to at least appear not to do that .
In Maine , when sports betting was legalised , the state ’ s two casinos were shut out in favour of its four Indian tribes .
The decision to raise the tax rate had
84 • ISSUE 136 • iGB L ! VE 2024