Pritzker budget includes new tax on online fantasy sports

The budget awaiting his signature also imposes licensing fees on operators.

Online fantasy sports operators will pay tax on their net revenue under the budget Gov. J.B. Pritzker signed Tuesday.

The budget also imposes license fees on the operators.

The 15% tax works like this: If Illinois fantasy contest players pay an operator $100,000 in entry fees and the operator pays out $90,000 of that in prizes, the taxable amount is $10,000, meaning a tax of $1,500.

While that may appear to hit only fantasy operators, players may end up paying higher entry fees, and prize pools could shrink.

The tax, to take effect July 1, places Illinois near other high-tax fantasy states including Pennsylvania, which taxes fantasy contest adjusted revenue at 15%, and New York, which imposes a 15% tax on in-state interactive fantasy sports gross revenue.

In Illinois, in addition to the tax, fantast contest operators will need to pay licensing fees. Large operators, or those with over 7,500 customers in the previous year, will pay $7,500 initially and $5,000 every two years to renew. Small operators, under 7,500 customers, will pay $500 initially and a $300 renewal fee every two years.

Lawmakers expect the fantasy sports move to generate $5 million a year.

Taken together, the online fantasy sports tax and license requirement turn the contests into another revenue trap set by Springfield.