Fanatics is the third mobile sportsbook operator to announce it will place a surcharge on wagers in Illinois if the per wager tax that was signed into law June 16 takes effect.
A Fanatics spokesperson confirmed a report by Sports Business Journal from Friday that it will levy a $0.25 surcharge to counteract the newest Illinois tax that goes into place July 1.
Lawmakers in the second-largest market in the United States surprisingly included the levy late in budget negotiations during the Memorial Day holiday weekend when the state’s $55.2 billion budget was passed. All mobile sportsbooks face a $0.25 surcharge per wager for their first 20 million wagers accepted, and $0.50 per wager for every bet taken thereafter.
Watching and waiting?
Fanatics did not offer a specific date when its surcharge would start, only that it would begin “in the Fall.” FanDuel and DraftKings, the top two operators in Illinois, previously announced they would place a $0.50 surcharge on wagers effective Sep. 1.
That start date implies the two industry titans would lobby lawmakers to scrap the surcharge during a potential veto session if one is called since they would likely reach the 20 million wager threshold and $0.50 surcharge at some point during September when the NFL season begins.
Based on Fanatics’ notable growth in the Illinois market during Fiscal Year 2025, it could very well join FanDuel and DraftKings in paying the $0.50 surcharge during FY 2026. The difference is Fanatics would not reach 20 million wagers — if at all — until very late in the fiscal year.
If Fanatics held back on implementing the surcharge until Sept. 1 similar to FanDuel and DraftKings, it would seem highly unlikely it would reach the 20 million wager mark, which means its surcharge would simply cancel out the state tax.
Fanatics has accepted 13.4 million wagers in FY 2025, a 79% increase compared to FY 2024 spanning July through April. Had the per-wager tax been in effect, it would have paid more than $3.3 million in taxes.
But Fanatics has averaged 1.45 million wagers per month since September, far closer to the 1.67 million average needed to reach 20 million in a 12-month span. If Fanatics maintained an average of 1.45 million wagers monthly for FY 2026, the 17.39 million wagers projects to $4.3 million in taxes.
The bottom line: More taxes paid to the state
Regardless of which tax Fanatics would pay, it would likely be in addition to reaching the higher end of Illinois’ progressive tax rates based on its growth the past 12 months. Those rates took effect July 1, 2024, after lawmakers replaced the flat 15% rate with ones ranging from 20% to 40% with the Fiscal Year 2025 budget.
Fanatics has generated $91.1 million in adjusted gross revenue for Fiscal Year 2025, which currently puts it in the 30% tax bracket and within $8.9 million of the 35% tier. It has paid $23.3 million in state taxes, an increase of nearly $9.7 million compared to the levy it would have paid from the previous 15% rate.
Two other sportsbooks capable of reaching 20 million wagers in Illinois over the course of Fiscal Year 2026, BetMGM and newcomer to Illinois bet365, have yet to announce if they will impose a surcharge on accepted wagers.
