New Illinois Budget Imposes Flat Tax on Sportsbook Wagers

Tucked into Illinois's fiscal year 2026 budget is a new, groundbreaking tax that directly impacts sports betting operators on a per-wager basis.

Now, the policy could prove to have massive consequences for not only the operators but also for bettors, too.

It's safe to say that there are concerns about the market shrinking, a decline in consumer value, and perhaps some players looking to offshore platforms.

Unprecedented Per-Wager Wax in 2026 Budget

After a late-night budget vote, Illinois lawmakers approved something that could severely impact the gambling landscape.

The new betting tax law would include a 25-cent tax on the first 20 million wagers placed annually. From there, it would go up to 50 cents.

This new flat fee tax applies to all bet sizes, regardless of whether it's $1 or $1,000. No matter what, the tax remains the same.

The change is expected to be signed into law by Governor J.B. Pritzker and will go into effect on July 1

Joe Stauff, a senior equity analyst at Susquehanna, says that this new move could force some players to offshore markets and that some online sportsbooks will cut back majorly on marketing and promotions.

This could, of course, slow growth for each platform and reduce player engagement

Barry Jonas of Truist backed up those concerns, noting that illegal markets could become more attractive as regulated platforms often already offer less competitive odds.

Aggressive Outlier or Sign of Things To Come?

This is the second major gambling tax increase in just over a year in Illinois. In July 2024, the state's tax rate increased from a flat 15% to a more progressive range of 20-40%. This resulted in DraftKings and FanDuel, the two largest operators in the state, being hit hardest.

Now, with this new per-wager tax, FanDuel would've paid about $59.8 million in fiscal year 2025. DraftKings would've paid $52.5 million, per InGame.

Operators like Circa Sportsbook, which fall below the 20 million wager threshold, face smaller increases. This could result in platforms like that becoming more appealing in a reshuffled market.

There are also concerns that consumers could face fees. Initially, after the July 2024 tax change, DraftKings planned to implement a "winners' surcharge."

However, they faced massive public backlash and retreated from that concept

Now, David Katz, an equity analyst for Jefferies, says that idea could come back, stay, and be used at multiple sportsbooks.

Of course, with this tax being 25 cents and scaling to 50 cents after 20 million wagers, the minimum wager amount could change.

This, in addition to reduced promotional offers, and potentially limited markets, could make for a worse player experience and make offshore sportsbooks look that much better value-wise.

Additionally, there are platforms like Kalshi gaining interest

This is considered a "prediction market." DraftKings and FanDuel could perhaps look into that model, but there's nothing showing they will yet.

In the long term, other states may adopt a similar tax structure

That said, this could be an aggressive outlier.

With this change taking effect on July 1, Illinois operators have very little time to adapt. In fact, DraftKings' stock fell 6% on Monday after this news came out.

The Sports Betting Alliance has slammed this policy, saying, “We will continue to fight this discriminatory tax alongside our customers — both right now in Illinois and in any state that considers these harmful tax changes in the future.”