Flutter is not flitting about when it comes to the Illinois legislature adding its proposed 25-cent or 50-cent tax on each individual sports bet, announcing early Tuesday morning that, effective Sept. 1, FanDuel will be passing the charge along to its customers, instituting a $0.50 transaction fee on all wagers placed in Illinois.
While FanDuel won’t start charging until days before the kickoff to the NFL season, the state of Illinois isn’t waiting, with its per-wager tax kicking in July 1 (assuming Gov. JB Pritzker signs the budget sent to him). Clearly, the braintrust at Flutter — FanDuel’s parent company — is hoping the braintrust in Illinois will use those few months to rethink the decision, noting in a press release that if the state pulls back on the transaction tax, the company will immediately remove the fee being placed on bettors.
“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,” Peter Jackson, the CEO of Flutter, said in the release. “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.”
Flutter also noted that last year, when the state legislature raised taxes on sportsbooks, the company made “extensive efforts” to not pass the added tax burden onto its customers.
Dollars and little sense
The transaction fee that has Flutter’s feathers ruffled is part of Illinois’ $55.2 billion budget for Fiscal Year 2026, which both chambers of the legislature passed a week ago Saturday in a move that caught the industry by surprise.
The tax structure is tiered, with sportsbooks paying $0.25 for each of their first 20 million wagers during the fiscal year, then $0.50 for every wager after.
News of the proposed tax didn’t begin emerging on social media until Saturday afternoon, triggering a digital Hail Mary by the Sports Betting Alliance (SBA), the industry group that includes FanDuel, DraftKings, BetMGM, Fanatics Sportsbook, and now bet365.
Despite generating more than 76,000 emails and tweets urging legislators to vote “No,” the measure passed. The SBA didn’t mince words in its post-vote assessment, calling the tax “discriminatory, punitive and constitutionally suspect” and warning it would be “destabilizing for regulated sports betting in Illinois.”
The SBA hammered home the impact on the Low Rollers podcast, noting that $1 or $2 wagers would effectively face a “massive 25% or 50% tax” once operators pass the fee along to customers.
What makes the new tax especially stinging for FanDuel (and DraftKings, which has yet to announce its plans) is that they’re the only operators currently projected to hit the 20-million wager threshold, meaning they’ll bear the brunt of the higher $0.50 rate. Based on Fiscal Year 2025 projections by InGame, FanDuel would face a $59.8 million tax bill from the transaction fee alone, while DraftKings would owe $52.5 million. By comparison, third-place BetMGM’s projected hit would be just $3.2 million.
The transaction fee piles on top of Illinois’ progressive tax structure implemented last year, which replaced a flat 15% rate with tiers ranging from 20% to 40%.That change has already proven to be a cash cow for the state, generating $304.9 million in total tax revenue for FY 2025 — a $148 million increase over the previous year’s haul.
When combined with the existing progressive rates, FanDuel and DraftKings are looking at effective tax rates that would actually exceed New York’s 51% levy, currently the highest in the nation. FanDuel’s combined tax burden is projected to create an effective rate of 51.6%, while DraftKings would face 51.1%.
