Analysts at the investment banking firm Jefferies argue the reaction to Illinois’ proposed sports betting tax hike are overdone.
On Tuesday, Jefferies analysts David Katz and James Wheatcroft issued a report, arguing that concerns over higher sports betting tax rates are “overdone.” They point out that only DraftKings and FanDuel would fall into the highest tax rate of 40% in Illinois, impacting smaller operators by a lesser extent.
Jeffries also points out that as many of these sports betting companies mature, they will no longer need to spend as much on promotion and customer acquisition. In fact, sports betting companies are alreadyJefferies also doesn’t see a lot of other states following Illinois’ lead. An amendment to raise the Massachusetts sports betting tax from 20% to 51% was rejected by the Senate last week. Meanwhile, New Jersey is considering a bill that would raise the online sports betting tax rate from 14.
Another point that Jefferies makes is that tax rates more than 25% could “increase the attractiveness of illegal markets.” That’s a point DraftKings CEO Jason Robins