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The sports betting sector was rocked by a late addition to the Illinois budget signed over the weekend by Governor J.B. Pritzker.
The budget included a new tax that will apply to every online sports wager placed in the state, on top of the progressive tax system already in place. Under the provision, sportsbooks operating in Illinois will be charged $0.25 for each of the first 20,000 online bets they take annually, and then $0.50 per bet beyond that threshold.
Truist analyst Barry Jonas noted that the impact would again be skewed to DraftKings (NASDAQ:DKNG) and Flutter Entertainment (FLUT) due to their high volume of betting action in Illinois. BetMGM (MGM) (OTCPK:GMVHF) was noted to have taken the third most bets in Illinois over the last year.
Jefferies analyst David Katz said it is possible the new Illinois sports betting tax could drive bettors to prediction market operators such as Kalshi, although he noted that those firms do not yet feature the parlay menus that make DraftKings (NASDAQ:DKNG), FanDuel (FLUT), and other online sportsbooks so popular with the betting public.
Shares of DraftKings (DKNG) were down 5.6% in premarket action, while Flutter Entertainment (FLUT) was down 4.0%. The ETFs with the highest exposure to DraftKings (DKNG) and Flutter (FLUT) combined are the Pacer BlueStar Digital Entertainment ETF (ODDS), VanEck Gaming ETF (BJK), and Roundhill Sports Betting & iGaming ETF(BETZ).