DraftKings Thursday became the second mobile sportsbook that conducts wagering in Illinois to announce a surcharge on all accepted bets, announcing a $0.50 per-wager fee on all bets effective Sept. 1.
The announcement is not a surprise considering FanDuel made its plans for a $0.50 surcharge on all wagers effective Sept. 1 known Tuesday. The two titans of mobile wagering in the United States are fighting back against a per-wager tax passed by the Illinois legislature late in its session at the end of May.
The first 20 million mobile bets accepted by a licensee in the fiscal year will have a $0.25 surcharge. The surcharge goes up to $0.50 on all wagers accepted above 20 million. The $55.2 billion budget passed in the statehouse is awaiting Gov. JB Pritzker’s signature, and the surcharge would take effect July 1 at the start of the new fiscal year.
DraftKings, like FanDuel, added that if the surcharge is repealed, it would not impose it.
Illinois is the second-largest legal sports betting market in the United States behind New York. Its $1.28 billion handle for April announced Thursday moved Illinois within $304 million of being the third state to reach $50 billion total handle post-PASPA. It was also enough for Illinois to re-take the No. 3 spot from Nevada, perhaps on a permanent basis as the two states are now separated by $1.2 billion.
This time, DraftKings follows through
“Illinois has been an important part of our growth, and we’re proud to have contributed meaningfully to the state through tax revenue, job creation, and a sustained investment in responsible gaming tools and resources,” said Jason Robins, chief executive officer and co-founder of DraftKings, in a statement. “We are disappointed that Illinois policymakers have chosen to more than triple our tax rate over the past two years, and we are very concerned about what this will do to the legal, regulated industry.”
Last summer, Illinois legislators overhauled their sports betting tax rates from a flat 15% to a progressive one with a floor of 20% and a ceiling of 40% based on revenue thresholds. Shortly after, DraftKings tried to combat higher tax rates with a potential surcharge on winning wagers in four high-tax states, including Illinois.
Robins and DraftKings, though, were left on an island when no other mobile operator followed their lead and were met with scorn and ridicule on social media. The Massachusetts-based sportsbook stood down less than two weeks after its announcement following FanDuel’s parent Flutter saying it had no plans to impose a similar surcharge on winning wagers.
Both FanDuel and DraftKings have been taxed at the maximum 40% rate in Illinois since December of this fiscal year after surpassing $200 million in adjusted gross revenue. The two have paid a combined $273.5 million in state taxes in Illinois through the first nine months of FY 2025, with FanDuel’s $148.4 million remittance an increase of $85.6 million above the previous 15% flat rate, while DraftKings’ tax bill of $125.2 million is up $71.1 million.
FanDuel has accepted more than 125.7 million wagers from Sept. 1 through April 30, which would have generated a surcharge of $62.9 million from the per-wager tax. DraftKings has processed 110.7 million wagers in that span, which would have generated $55.3 million.
The Sept. 1 effective date both FanDuel and DraftKings decided upon for the surcharge start is an acknowledgement both mobile operators estimate reaching the 20 million threshold to trigger the higher surcharge that month. FanDuel had 31.3 million accepted wagers last year from July to September, while DraftKings totaled 32.2 million bets.
FanDuel has accepted 142.9 million wagers in the first 10 months of Fiscal Year 2025 through April, while DraftKings has totaled 127.3 million accepted bets.
Will any other Illinois operator follow suit?
DraftKings proved last year how difficult it is to be all alone with an unpopular move that impacts bettors, but in joining FanDuel with its transaction fee, the question now is whether there is strength in numbers in fighting higher tax rates and novel tax surcharges.
Illinois has 10 mobile sportsbooks in operation, with bet365 the most recent operator to launch in March. Beyond FanDuel and DraftKings, the operators with the best chances to reach the 20 million wager threshold and trigger the higher surcharge are BetMGM, Fanatics, and bet365.
BetMGM is averaging 1.4 million wagers per month in the first 10 months of FY 2025, and Fanatics over 1.3 million. In a smaller sample size of nearly two full months, bet365 has accepted nearly 2.9 million bets.
