The sports betting landscape in Illinois is undergoing significant changes as the state legislature imposes increased taxes on all mobile and online sports wagers placed with licensed operators
In response, DraftKings will also implement a 50-cent transaction fee on all mobile and online bets placed in Illinois through DraftKings Sportsbook, effective September 1, 2025.
It's a move we saw FanDuel make earlier this week.
DraftKings CEO Jason Robins expressed disappointment with the decision by Illinois policymakers to more than triple the tax rate. He highlighted concerns about the negative impact this could have on the legal and regulated sports betting industry while the illegal market continues to thrive without paying taxes or offering consumer protections.
FanDuel Added Its Own Transaction Fee
FanDuel, another major player in the Illinois sports betting market, was the first to announce a 50-cent transaction fee on all sports bets in Illinois. Starting in September, this fee will be applied to offset the increased costs that result from the new tax structure.
FanDuel's parent company, Flutter, indicated that it would remove the transaction fee if Illinois lawmakers reconsider the recent tax changes. This move aligns both companies in their response to the policy changes, emphasizing their intent to collaborate on a sustainable approach to regulation that benefits the state and the industry.
Understanding the New Illinois Sports Betting Tax Structure
The recent tax changes in Illinois have introduced a tiered tax system. Sportsbooks are now charged 25 cents per wager for the first 20 million bets they handle each year. Once a sportsbook surpasses 20 million wagers, the fee increases to 50 cents per bet. Additionally, last year, the overall tax rate on sportsbooks was moved from a flat 15% to a tiered system ranging between 20% and 40%.
These changes have prompted major sportsbooks, including DraftKings and FanDuel, to rethink their pricing strategies. With both companies accounting for more than 300 million of the over 370 million sports bets placed in Illinois in 2024 alone, the financial impact of these increased taxes is substantial.
Implications for the Sports Betting Industry
The adjustments by DraftKings and FanDuel signal a broader concern in the industry regarding the sustainability of current regulatory frameworks. Both companies have voiced a strong preference for policymaking that supports ongoing investment and growth while maintaining responsible gaming practices.
The Sports Betting Alliance, the lobbying group representing DraftKings, FanDuel, BetMGM and Fanatics Sportsbook, believes the per-bet tax will hit small, recreational bettors the hardest.
These are people who bet as little as $1 on multiple-game bets. Currently, there are no plans from FanDuel, DraftKings, or other betting companies in Illinois to raise the smallest amount you can bet. Last year, DraftKings considered adding extra charges to winning bets but dropped the idea after people reacted negatively.
Should the Illinois legislature decide to roll back these recent tax increases, both DraftKings and FanDuel are prepared to eliminate their 50-cent transaction fees, thereby alleviating the cost burden on sports bettors in the state.
The introduction of transaction fees by DraftKings and FanDuel marks a significant development in response to Illinois's increased sports betting taxes. As the situation evolves, both companies remain committed to advocating for policies that sustain the legal sports betting industry and provide consumer protections. It will be important to monitor whether Illinois lawmakers reconsider their current approach to taxation in this rapidly growing sector.
