With the kickoff to the NFL season days away, Illinois bettors woke up Labor Day morning to a harsh new reality: either minimum bet limits or surcharges on every single wager they make.
All 10 mobile sportsbooks in Illinois have done one or the other after the state legislature passed a first-of-its kind bill in May — since signed by Gov. JB Pritzker — to add a surcharge to each individual bet with a 25-cent fee on the first 20 million wagers each year, and a 50-cent fee on all wagers above the 20 million threshold.
Bet365 became the latest to announce a plan Sunday when it sent a letter to customers saying it will impose a 25-cent fee for all bets under $10 and for those over $10, it “will be covered by Bet365.” Bet365 is the only company to offer such an option.
This came on the heels of the legislature first passing sports betting legislation with a 15% operator tax on adjusted gross revenue, then later boosting the tax to 20% to 40% based on revenue. When the legislature then added the fee for every bet placed, the sportsbooks really had no choice from a profitability perspective but to pass it on to their customers in one way or another.
“I have already gotten some messages from our subscribers, asking which books to use to avoid the taxes,” said Connor Allen, the director of business development and betting at Betsperts Group. “As expected, books are just passing the tax down to the consumer, which hurts the low-dollar bettors most.”
Speaking of “as expected,” Gambling Twitter is none too thrilled with the surcharges/minimum bets:
More voices of opposition
Dorian Cornelius, the CEO of Heat Wage Props, is based in Chicago and has strong feelings.
“I personally believe that we throw the phrase ‘land of the free’ around too loosely,” he told InGame. “Every time you look up, we’re being taxed for something else. This one is outrageous, though. If I make a 10-cent bet on a longshot parlay, why would I pay 50 cents to do so? I don’t agree with taxing for every bet at all, but making it a fixed rate regardless of what you spend is just absurd. This may be the beginning of the end for me and these online sportsbooks because I will not be paying a fee each time I place a bet. It’s hard enough cashing one as it is. The greed in this country is out of control!”
An X user who goes by “The EV Wiz” also reached out to InGame.
“As an Illinois resident, it’s frustrating to see yet another new tax piled on,” he said. “We already carry the highest combined state and local tax burden in the nation. Now, with this new sports betting tax, it’s the consumers who get hit the hardest. Most bettors are already losing money to the books, and those books are already paying taxes on their revenues, which feels like double-dipping. I’ve already taken my business to one of the sportsbooks that hasn’t enacted the new fees yet. We need to nip this in the bud and get it reversed, because once other blue states see this pass in Illinois, they will likely follow the same playbook and even more consumers will pay the price.”
The Sports Betting Alliance (SBA) was also opposed the development, issuing a press release last week noting that this will push bettors to illegal markets.
“For the second year in a row, legal sports betting companies in Illinois have been forced to respond to a state tax, while the illegal online gaming operators salivate at the opportunity to win customers from the legal market,” said Sports Betting Alliance of Illinois spokeswoman Maura Possley in a press release. “The Illinois per-wager tax not only harms small dollar, recreational consumers the most, but it will send more people to the illegal and predatory online gaming market that is growing without any oversight or consumer protections and zero accountability.”
Full list of who’s doing what
Here’s the full list of moves the sportsbooks in Illinois made to combat the per-bet fee:
- Caesars Sportsbook: 25 cents per wager
- BetMGM: $2.50 minimum bet
- BetRivers: $1 minimum bet
- FanDuel: 50 cents per wager
- Circa Sports: $10 minimum bet
- DraftKings: 50 cents per wager
- ESPN Bet: $1 minimum bet
- Fanatics: 25 cents per wager
- Hard Rock Bet: $2 minimum bet
- Bet365: 25-cent charge on bets under $10
The sportsbooks have chosen what amounts to three different routes to combat the issue. And to state the obvious: It is an issue. In fact, it’s still an issue, just in terms of the math, for four of the five sportsbooks requiring minimum bets.
BetRivers and ESPN Bet have it worst with their $1 minimums. Let’s say I bet Team A at -110 for $1.10. And you bet Team B at -110 for $1.10. Whoever wins, ESPN Bet or BetRivers pays out $2.10, for a tidy 10-cent profit on the action. Except — and this is a pretty big “except” — they’ll end up losing 40 cents on the deal after paying the 25-cent fee on both sides.
Basically, some corporate espionage could take place with a high volume of small bets and badly hurt these books.
Hard Rock, with its $2 minimum, would lose 30 cents in the above scenario, and BetMGM, with its $2.50 minimum, would pay out 4.77, losing “only” 23 cents.
Circa Sportsbook seems to be the only book that understands math, as its $10 minimum bet would still yield a profit of 31 cents if both sides were bet.
The other books are simply passing the cost of the wager directly to the consumer, with FanDuel and DraftKings going all the way to 50 cents, as they are the only two books who have gone over the 20 million-bet barrier in Illinois in past years.
