June 6, 2024Lauren

Tune into this week's hottest iGaming headlines from the USA:

- Illinois increases sports betting taxes from 15% up to 40%
- Evolution Gaming sues Light&Wonder
- US Supreme Court schedules the West Flagler decision for June 13th.
- New Research shows the scale of illegal gambling in New York, New Jersey, and Minnesota.
- The legality of sweepstakes casinos is challenged in Georgia.

Illinois Tax Hike Will Hit Online Operators Hardest

Illinois' new state budget bill is currently on the Governor's desk. It includes a controversial tax hike for sports betting operators, raising the levy from 15% of adjusted gambling revenue to 40%.

The new sliding scale sees the largest operators pay the most:

  • Revenue up to $30 million would be taxed at 20%
  • From $30 million to $50 million would be taxed at 25%
  • From $50 million to $100 million would be taxed at 30%
  • From $100 million to $200 million would be taxed at 35%
  • AGR above $200 million would be taxed at 40%

Illinois has seven online sportsbooks, with FanDuel and DraftKings leading the market and exceeding $200 million in AGR yearly. Both operators will now pay an increase of over 160% in taxes.

Operators, stakeholders, and some state senators have fiercely opposed the increase. Lawmakers debated the issue until 4:30 a.m. and voted three times before it passed.

The tax revenue created (an estimated $200 million) will help balance the state's budget, which is currently reported to have an almost $900 million deficit for FY25.

Experts and operators have warned that the tax increase will negatively affect the market, with players ultimately paying the price through reduced promotions, products, and investments.

Two Gaming Giants Go Head to Head: Evolution Sues L&W

Evolution Gaming filed a case with the Nevada District Court, accusing Light&Wonder (L&W) of using Evolution's intellectual property to reproduce games.

The case concerns Lightning Roulette and dates back to 2021 when Evolution asked L&W (then Scientific Games) to create a land-based version. While the partnership was never realized, Evolution claims that while in talks, they supplied L&W with confidential data relating to the game, which Evolution says L&W used to create Roulette X and Power X.

Evolution is now seeking compensation and to prevent L&W from creating more similar titles. This is the second time in 2024 that L&W has been accused of creating copycat titles.

Florida: Supreme Court to Discuss West Flagler Case

On June 13th, nine justices will discuss whether West Flagler and Associates vs. the state of Florida should be heard before the court. It will proceed if four of the nine justices decide the case has merit.

The US Supreme Court only hears cases with national implications. While the Tribal Compact being challenged applies to Florida, West Flagler and Associates have argued that it meets this criterion as it covers online gambling and the Indian Gaming Regulatory Act, which is a federal law. 

We'll bring you more news on this groundbreaking case after June 13th.

New Research: Illegal Gambling in the USA Still Raking in Billions

New research published by The Campaign for Fairer Gambling (CFG) and conducted by Yield Sec has revealed the vast scale of illegal gambling in New York, New Jersey, and Minnesota. 

According to the report: 

  • 62% of the total online Gross Gambling Revenue (GGR) in 2023 in New Jersey, which has iGaming and sports betting, went to the legal market, while 38% was spent offshore (16% on iGaming and 22% on sports).
  • In New York, where only online sports betting is legal, 24% of spending is done via legal channels, with 76% being spent offshore (49% on iGaming, 27% on illegal sportsbooks).
  • And in Minnesota, where all forms of online gambling are illegal, 100% of the $2,444 million GGR generated in 2023 was spent offshore. 

Interestingly, despite sports betting being legal in New York for two years already, more is still spent on illegal bookmakers than on the state's legal options ($1,690 million VS $1,906 million), suggesting the state's high tax rate, which is 51%, could be driving offshore gambling, where players can find more competitive but unregulated gambling options. In comparison, New Jersey, which charges a 13% tax on Gross Gambling Revenue, has a much lower rate of illegal sports betting.

This research builds on the American Gaming Association's previous work, which estimated that "Americans bet more than $510.9 billion a year with illegal and unregulated operators. This costs the legal industry $44.2 billion in gaming revenue and state governments $13.3 billion in lost tax revenue."

Legality of Sweepstakes Challenged in Georgia

Sweepstakes casinos are incredibly popular in the USA, as they essentially allow players (almost) nationwide to access online casino games via a legal loophole. 

However, the number of states looking to close this loophole is steadily growing (Michigan and Idaho have already taken action), and this week, Georgia joined the ranks as a class action suit was brought against VGW (operator of Luckyland Casino, Global Poker, and Chumba Casino).

Destiny Kennedy, a Georgia resident who claims VGW offers illegal gambling in the state, filed the case to recoup her losses. So far, VGW (one of the largest sweepstakes operators in the USA) has yet to respond to the case.

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