The Zhitong Finance App learned that the Illinois Senate passed a bill on Sunday proposing higher taxes on online sports betting businesses. Affected by the news, US sports betting stocks declined before the market on Tuesday.

According to the new proposal, online sports betting operators will start paying higher taxes starting July 1, with tax rates ranging from 20% to 40% depending on their annual revenue level. Sports betting operators in Illinois have been paying 15% tax since June 2021. Illinois Governor J.B. Pritzker proposed raising the tax rate to 35% earlier this year.

In the US stock market on Tuesday, DraftKings (DKNG.US) fell nearly 7% and Flutter Entertainment (FLUT.US) fell more than 4%. If investors consider that other states may also raise tax rates, the entire industry could be affected more broadly. Sports betting operators in the US also include MGM (MGM.US), Penn National Gaming (PENN.US), Rush Street Interactive (RSI.US), etc.

Wall Street investment agency Needham analyst Bernie McTernan predicts that higher taxes will put pressure on DraftKings's 2024 adjusted EBITDA, even though the incremental tax is less than the agency's estimate of $44 million. For Rush Street Interactive and Payne National Gaming, given their current market share and annual revenue, the proposed progressive tax rate means they will pay lower taxes than DraftKings.