Jefferies sees Illinois sports betting bill as negative for operators

Jefferies views Illinois passing an additional tax on online sports betting wagers as a negative for the operators, including DraftKings (DKNG), Flutter Entertainment (FLUT) and Rush Street Interactive (RSI). The firm estimates the impact will be measured as a low to mid-single-digit hit to fiscal 2025 adjusted EBITDA, prior to any mitigation efforts. More importantly, the specifics of this tax appear more difficult to mitigate than traditional gross gaming revenue taxes, contends Jefferies. It believes the operators “could look to more creative strategies for margin preservation. Jefferies does not expect other states to follow Illinois given specific states’ history of tax policy. It views New Jersey “as a clear model for other states to replicate, with reasonable tax rates, continued handle (and state tax revenue) growth, and land-based participation.”