IL behavior
Illinois Senate passes new tax rates, Dutch resistance to tax hike, Paquetá charged, Delaware considers expansion +More
Illinois on the verge of passing a new progressive tax regime.
In +More: North Carolina considers college prop ban.
The Dutch plans to hike tax are slammed.
West Ham’s Lucas Paquetá is charged with spot fixing.
Delaware considers expanding the OSB market.
We sold our clothes to the state, I don't mind, I don't mind.
Illinois tax
Not that type of progressive: The sports-betting industry’s arguments against Illinois introducing a progressive tax system with a top rate set at 40% for the leading operators fell on deaf ears, after the state Senate passed a version of the budget including the new tiered system.
The amended legislation now heads back to the House where it is expected to gain approval, with implementation likely on July 1.
Ratchet: The applicable rates would be 25% at $30m, through 30% over $50m, 35% over $100m and up up 40% for those generating more than $200m in annual GGR.
The top rate would leave Illinois with the second-highest sports-betting tax rate behind the 51% applicable in New York.
Gov. JB Pritzker had originally called for a rate of 35% in February as part of his budget proposal.
An IL wind: The Sports Betting Alliance went on X to rail against the Senate approval. “This is an extremely disappointing decision that will cause real harm,” the SBA posted. The alliance’s president Jeremy Kudon added that the new rate would mean “worse products, worse promotions and inevitably worse odds for Illinois customers.”
He went on to say the tax hike would provide a “massive leg-up” to the black market.
Going nuclear: Also on X, local news reporter Hannah Meisel posted that operators were “threatening the nuclear button.” Notably, the top rate would only affect FanDuel and DraftKings, which respectively generated $429m and $350m of GGR in the LTM.
“A source close to DraftKings and FanDuel said that ‘all options are on the table, including withdrawing from the state’,” Meisel wrote.
The operators previously launched a write-in campaign to persuade Illinois voters to complain about the proposals.
A blow for the little guy: The analysts at Deutsche Bank pointed out that the graduated tax rate concept was a suggestion from the casino operators. “It serves to leave the smaller players relatively unharmed by the rate increase,” the team said.
They added that the strategy on the part of Illinois takes a key talking point around “putting smaller players out of business” and effectively neutralizes it.
Looming clouds: “On its own,” Deutsche Bank suggested, they didn’t see the tax increase as being “overly draconian for the operators” and that is was “of little consequence to the majority of the operators in the state.”
But, the team ominously warned, the industry is “positioned to endure state tax pressure for years to come, for a variety of reasons.”
State tax dollars they argued, have “broadly been below expectations” in many states.
You don’t know what you’re doing: This was in part because regulations were drafted “with seemingly little understanding” of promotional deductions. “This has created a wide divide between statutory and effective tax rates in many states, while other states have seen the promo deduction caps maxed out.”
More to come: The DB analysts see several states that are “likely” to follow the lead of Illinois, including New Jersey, Michigan, Iowa, Indiana, Massachusetts, Arizona and Kansas.
“Undoubtedly, New Jersey and Michigan would be the most punitive, given the well below peer tax rates on the OSB side, as well as the relatively low iCasino segment tax rate,” they added.
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+More
North Carolina has become the latest state to consider a ban on prop betting in college and amateur sports. State Rep. Marcia Morey has filed House Bill 967, which seeks to prohibit the wagering, amid concerns harassment of NCAA student-athletes and coaches linked to gambling is on the rise.
Sweden’s appeal court has slashed a fine of SEK100m ($9.4m) handed to Kindred for bonus rules violations in 2019. The operator reported in a regulatory filing that it will pay around SEK30m as punishment for allowing its Spooniker brand to make promotions that were considered by regulators to be financial incentives, in breach of bonus rules.
Kindred successfully appealed on grounds the rules were considered “vague” and open for “different interpretations”.
The Australian Communications and Media Authority has requested that internet service providers block eight illegal gambling websites found to be in breach of the country’s Interactive Gambling Act 2001.
The sites are Jogi Casino, Dundee Slots, Lucky Hunter, Lucky Wins, Lukki Casino, Spin Fever, Clubhouse Casino and Winport Casino.
More than 900 websites have been blocked since ACMA’s first request, in November 2019, and 220 illegal services have exited the market since 2017, the government said.
Dutch tax debate
Cutting off your nose: The new far right Dutch government’s plans to raise the rate of taxes on gambling from the current level of 30.5% to 37.8% has been roundly condemned, while analysis from Regulus shows the move would be counterproductive.
Olympian heights: The Dutch Olympic Committee is the latest organization to criticize the proposal, which was included in the four-way coalition agreement announced earlier this month.
It estimated that the payments sport received from the lottery would fall from €52m in 2023 to €39.5m.
Echoing the complaint, the head of the Dutch cycling federation went on LinkedIn to say the changes meant there would be “less money available for top-level sports programs.”
The Netherlands Online Gambling Association (NOGA) previously said the proposed tax increase “endangers the viability” of the regulated market.
Backfire in the hole: Meanwhile, the analysts at Regulus suggested the government’s plans to raise more in tax revenue from the gambling sector, while also moving to ban slot machines, could backfire and give the black market a distinct boost.
The Dutch authorities currently believe the channelization rate is ~90%, which Regulus estimated implies an existing illegal market of around €150m.
It is, as the team pointed out, an “already sizable base of working illegal supply.”
If, as Regulus suggested, the legal operators are forced to cut bonuses to players to offset the new tax, they anticipate many high-value and regular customers would be drawn to the 33%+ incentive levels found in the black market.
“The channeling rate could therefore fall well below 80%,” they added.
Such a shift could cost the Dutch exchequer ~€55m a year, meaning a tax increase would see the overall tax take decline. “An increase in GGR tax to 37.8% does make the Dutch market uncompetitive,” Regulus concluded.
“It is likely to grow the channeling gap to the extent that the tax increase becomes counterproductive on its own fiscal terms as well as significantly reducing player safety in the Dutch market.”
Zero tolerance: Separately, the Dutch Gaming Authority (KSA) has announced a crackdown on illegal gambling machines. It said an uptick in reports was behind the enforcement drive, with multiple operators in breach of slot machine regulations, which require two permits to place a machine in a catering establishment or arcade.
Operators need approval from KSA to operate slot machines along with a presence permit from the municipality where the machines will be installed.
It said operators will be given two weeks to resolve problems before further enforcement.
Paquetá charged
Hammer blow: West Ham midfielder Lucas Paquetá faces a 10-year ban from football after the Football Association charged him with four counts of spot-fixing. At the age of 26, such a ban would effectively end his career.
Like my dreams, they fade and die: The Brazilian, who is set to play for his country at the Copa America in July, had continued to be the subject of transfer rumors, despite the sudden collapse of a proposed £85m move to Manchester City shortly after news of the alleged betting scandal broke in August last year.
Four warned: Paquetá stands accused of intentionally picking up yellow cards in four English Premier League games between November 2022 and August 2023 – against Leicester, Aston Villa, Leeds and Bournemouth – to ensure bets were won.
The FA charge sheet read: “It’s alleged that [Paquetá] directly sought to influence the progress, conduct, or any other aspect of, or occurrence in these matches by intentionally seeking to receive a card from the referee for the improper purpose of affecting the betting market in order for one or more persons to profit from betting.”
The FA has also charged Paquetá with two breaches of FA Rule F3 in respect of alleged failures to comply pursuant to FA Rule F2, which relates to providing information and documents.
He has until June 3 to respond to the charges, subject to any request for an extension to the deadline.
The charges follow a nine-month investigation by the FA.
Get away: The bookmaker that alerted the International Betting Integrity Association to suspicious betting patterns on the matches cited was none other than West Ham’s shirt sponsor Betway.
The suspicious bets were traced to the island off Rio de Janeiro where Paquetá grew up.
It wasn’t me: Paquetá strenuously denied the charges. Proclaiming his innocence on X, he said: “I am extremely surprised and upset that the FA has decided to charge me. For nine months, I have cooperated with every step of their investigation and provided all the information I can. I deny the charges in their entirety and will fight with every breath to clear my name.”
West Ham has pledged to “stand by and support” their player throughout the process.
Banning order: While a multi-year ban is expected, there are few precedents in English football. Two Premier League players have recently received bans for betting on games – Brentford striker Ivan Toney, who served eight months on the sidelines, and Newcastle midfielder Sandro Tonali, who is still serving his 10-month ostracization.
Serious as: However, Paquetá’s case differs in that he is accused of manipulating outcomes rather than placing bets. “This is about as serious as it comes for alleged corruption,” according to Sky News correspondent Rob Harris. It is “about how much you can trust what you are eventually seeing,” he added.
In 2018, Lincoln City’s Bradley Wood was banned for six years for deliberately picking up bookings in two FA Cup matches, with two friends betting on the outcome.
In 2022, non-league Stratford Town’s Kynan Isaac was banned for 11-and-a-half years after he was found guilty of spot-fixing and placing illegal bets on an FA Cup match.
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Delaware mulls OSB expansion
Come one, come all: Delaware lawmakers are studying new legislation that proposes expanding the number of sports-betting operators permitted in the state. State Rep. Franklin Cooke has filed a bill that would upend the existing contract with a sole licensee, the BetRivers app.
Cooke claimed research by a key regulatory working group was published too late to take effect after the Delaware Lottery Office finalized the single-operator agreement in August 2023.
The working group recommended the state allow up to six mobile sports-betting operators, and Cooke’s bill would deliver the expansion.
“This legislation will produce revenue for the state and to assure that Delaware state’s lottery office remains competitive with our neighboring states,” he said.
There is “substantial consumer demand” for multiple operators, Cooke said, adding that Delaware residents favor neighboring Maryland, Pennsylvania and New Jersey where the market is broader.
Everything counts: Operators would have to give the state 18% of their revenue, while BetRivers is estimated to currently provide the state with around 40% of its revenues for the General Fund. Short term, the decision would lose the state around $3m, according to government estimates, but some lawmakers have said the numbers are incorrect and have called for a more accurate projection.
The fiscal note does not factor in a one-time license fee payment of $500k that each vendor must stump up for a five-year license.
BetRiver’s parent company Rush Street Interactive (RSI) has pushed back on Cooke’s proposals.
Adam Marchuk, VP of legal at RSI, said the app has only been operational for less than five months, and the sole contract remains the most profitable option for Delaware. “I’ve heard some criticisms of our performance, but we are on pace to meet and exceed all projections for the Delaware online sports-betting market this year and for years to come,” Marchuk told Delaware Public Media.
“If the market is the same size, the state unquestionably makes more revenue, generates more revenue under the single-operator model, as reflected in the fiscal note.”
I hear you knocking: FanDuel, meanwhile, claimed to have clocked 600k logon attempts to its app from the First State in March alone. It (along with other operators) claimed the market remained largely untapped and the state was losing revenue due to the weak brand of BetRivers.
Lawmakers were also warned that RSI could legally challenge the bill, given the state has already contractually agreed BetRivers is the sole mobile gaming operator for Delaware.
The bill will be renegotiated and is expected to reappear in the next 12 days.
Calendar
May 28-30: IAGA, Washington DC
June 6: Gaming in Holland
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