DraftKings and FanDuel Respond Strongly to New Illinois Sports Betting Tax Law

Illinois recently passed a new sports betting tax law that'll, instead of a percentage tax, have a per-wager tax of $0.25 on each of the first 20,000,000 wagers and then scale to $0.50 after that. This goes into effect on July 1, assuming Governor J.B. Pritzker signs the new budget that's sent to him.

With this new law, the top operators like FanDuel and DraftKings would be hit hardest, and now, they're responding to the new law.

FanDuel's Response

With this new law in place, Flutter, the parent company of FanDuel, will now pass this fee onto its players, adding a $0.50 fee on all wagers placed in Illinois. This will go into effect just before the NFL season on Sept. 1.

It appears FanDuel Sportsbook is hopeful that Illinois will reconsider its position and mentioned that, if Illinois retracts the per-wager fee, it will remove the per-wager fee.

“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. We are disappointed that the Illinois Transaction Fee will disproportionately impact lower wagering recreational customers while also punishing those operators who have invested the most to grow the online regulated market in the state.

We also believe the introduction of the Illinois Transaction Fee will likely motivate some Illinois-based customers to bet with unregulated operators. These operators do not contribute tax revenue to the state, will not collect the newly announced transaction fee and do not offer the same levels of customer protection that regulated operators provide," said Peter Jackson, the CEO of Flutter, in a press release.

Last year, Illinois also passed a new sports betting tax law, and Flutter mentioned that it made "extensive efforts" to not put that on the players.

In response to this new law, the Sports Betting Alliance, an industry group that includes FanDuel, DraftKings, BetMGM, Fanatics, and bet365, managed to get 76,000 emails and posts on X sent to legislators to vote "no" on the law.

According to a report in the Chicago Tribune, operators like FanDuel and DraftKings could have an effective tax rate of about 60%.

DraftKings's Response

While FanDuel plans to add the fee to each wager, DraftKings has been a bit more vague, saying it'll "take action" but not yet explaining what that action will be.

A spokesperson for DraftKings mentioned that more information is coming soon.

Last year, DraftKings proposed a "surcharge" on winning bets for online sportsbooks and came in response to the then-new tax law in Illinois. DraftKings was met with heavy criticism, and Flutter responded by saying they wouldn't add a surcharge.

DraftKings ultimately reversed its position on the surcharge.

It's unclear if DraftKings will follow the same road as FanDuel by implementing a per-wager fee, but that could make sense given their past ambitions of a surcharge on winning bets.

That said, these two, which are both with the Sport Betting Alliance, didn't announce their plans together, so perhaps there will be a different approach.

We'll see what comes of this law should DraftKings and FanDuel, two of the biggest operators in the state, stand pat and implement these changes.