DraftKings and Flutter Stock Plunge Following Illinois Tax Hike Proposal

DraftKings and Flutter Stock Plunge Following Illinois Tax Hike Proposal

Both DraftKings and Flutter Entertainment saw their shares drop yesterday (May 28) when a gambling tax increase was proposed in Illinois.

Illinois lawmakers discussed the increase over the weekend at the 2025 budget meeting, but it has not yet been formally approved.

The impact of the rise has been seen faster than people thought, and stocks of large operating companies have already been affected.

Flutter ended yesterday’s trading at $188.33, down 7.7% from Friday night’s final price ahead of the long memorial weekend.

DraftKings also saw a similar downward trend, as its closing price on Tuesday was $36.61. This figure is 10.2% lower than that of Friday afternoon.

The substantial tax increase would mean DraftKings and Flutter Entertainment would qualify for the top payout tier.

Flutter Entertainment is an international sports betting and gaming company that owns FanDuel.

Proposed tax increase in Illinois and what it means for operators

Late Sunday night (May 26), senators approved a fiscal year 2025 budget that includes a sports betting tax increase, making Illinois the second-most expensive state for operators of bets do business.

Operators with the highest adjusted gross revenues will have to pay a 40% tax and even the smallest operators will have to pay more, at 20%. The rule has been a 15% tax that came into effect when sports betting began operating in June 2021.

Anyone who generates adjusted gross income of $30 million a year will be subject to the 20% tax, while reporting more than $200 million a year would see the 40% tax rate.

Other limits are also included, all of which are significantly higher than what sports betting companies currently pay.

The Sports Betting Alliance (SBA) has created a ‘No Tax Increase in Illinois’ page on its website as it urges people to tell lawmakers that new taxes should not be introduced.

In reasoning why this is important, they say: “More taxes mean worse odds for players. Customers will have access to fewer promotions and bonuses. “A tax increase will increase illegal offshore sports betting.”

Featured Image: Photo by Joel Mott on Unsplash