FanDuel announced plans Tuesday to slap a $0.50 transaction fee on every online wager placed in Illinois, an additional juice that the sports betting behemoth says it has to squeeze because state lawmakers are saddling sportsbooks with a new tax on every bet they take.
Legislators who signed off on the first-of-its-kind per-wager tax to help bridge a $1 billion state budget gap say big gambling corporations like DraftKings can afford another dent in their profit margins.
But after sweeping sports betting tax hikes last year, leaders of the booming industry claim the one-two taxing punch will lead to worse odds — and drive bettors to the black market.
“It is important to recognize that there is an optimal level for gaming tax rates that enables operators to provide the best experience for customers, maximize market growth and maximize revenue for states over time,” said Peter Jackson, CEO of FanDuel’s parent company, Flutter.
They’ll start adding the $0.50 fee to online betting tickets Sept. 1, Jackson said — just in time for the gambling glut of a new NFL season.
The budget package approved by the Illinois General Assembly May 31 calls for licensed sportsbooks to pay a tax of $0.25 for each of the first 20 million wagers they accept per year, then $0.50 for every bet beyond that.
Those levies will take effect July 1, pending Gov. JB Pritzker’s expected signing of the budget.
FanDuel and DraftKings are the only companies among Illinois’ 14 legal sportsbooks that crossed the 20 million-wager threshold last year, taking more than 50 million apiece.
A DraftKings spokesman said the company “anticipates taking action and expects to share more information soon.”
When legal sports betting launched in Illinois in 2020 as part of a massive gambling expansion championed by Pritzker, sportsbooks paid a flat 15% tax on the revenue they made after paying out winners.
Lawmakers upped the state’s ante last year with a graduated tax system topping out at 40% for the online betting giants whose ads blanket broadcasts and billboards nationwide — prompting threats from the companies to cease operations in Illinois altogether.
“They backed down last year, so this could be another episode of ‘The Boy Who Cried Wolf,’” said state Sen. Bill Cunningham, the South Side Democrat who shepherds much of the gaming legislation that passes through the state Capitol. “They can charge whatever fee they want.
“We do have to be careful that we don’t overtax this and drive activity underground. I feel like we’re getting close to that point, but I don’t think we’ve hit it yet,” Cunningham said, pointing to New York’s 51% tax rate.
Despite lobbyists’ feverish efforts to swat down the per-wager tax — including an online petition drive that garnered some 76,000 messages of opposition in a few hours — it faced little pushback within supermajority Democratic caucuses in their marathon finish to the spring legislative session.
Lawmakers had initially considered taxing companies for the number of individual sports betting accounts each had enlisted, but opted against it because many of those accounts go dormant after curious one-time bettors lose interest.
Democrats also jacked up taxes on tobacco and nicotine products, with the so-called sin taxes representing “the most politically digestible” options for legislators in a tough budget year, Cunningham said.
The Sports Betting Alliance, which represents the books, slammed it as a “discriminatory, punitive and constitutionally suspect tax increase on legal sportsbooks who have invested more than a billion dollars in the state.”
Revenue figures from the Illinois Gaming Board show the companies have consistently hit pay dirt since the state legalized sports betting five years ago.
FanDuel has raked in some $1.5 billion in Illinois, including nearly $491 million last year. They’ve also paid more than $327 million in taxes, including $118 million in 2024.
DraftKings turned a $418 million profit last year before paying about $100 million in taxes.
More than 1.3 billion individual bets have been placed in Illinois since the industry launched a few days before the COVID-19 pandemic turned life upside down.
The total handle, or amount of money wagered, for the first five years of the industry tops $48 billion — which averages out to nearly $307 wagered every second.
State Rep. Kam Buckner, a Chicago Democrat and top Springfield budget negotiator, said he “would’ve preferred not to revisit the industry’s tax rate again.”
“That said, Illinois remains one of the most lucrative and stable sports betting markets in the country. These companies are making real money here,” he said. “I understand FanDuel’s concerns, but I hope they’ll reconsider passing this flat fee on to every customer. There’s room for these companies to remain profitable while also being responsible civic partners.”