Illinois legislators stunningly passed a sports betting tax on operators for each wager placed as part of their $55.2 billion budget for Fiscal Year 2026 on Saturday. Both chambers passed the budget, which now goes to Gov. JB Pritzker for signature. The budget — and new tax — will go into effect July 1.
One year after seeing their tax rate changed from a flat 15% on adjusted gross revenue to a progressive one ranging from 20% to 40% based on revenue thresholds, Illinois sportsbooks must now also pay a $0.25 levy on each of their first 20 million wagers accepted during the fiscal year. For the volume of wagers beyond 20 million, the surcharge will be $0.50.
News of the proposed levy did not begin to emerge on social media until Saturday afternoon local time. That triggered an all-out social media blitz on X led by the lobbyist group Sports Betting Alliance. It included former NFL tight end and FanDuel endorser Rob Gronkowski as well as multiple Barstool Sports personalities.
The group called upon the public to email their legislators to vote down the tax in a late counter maneuver, but even with reportedly more than 75,000 emails sent to urge a “No” vote, the measure passed shortly before midnight.
“Make no mistake, this discriminatory, punitive and constitutionally suspect tax increase on legal sportsbooks who have invested more than a billion dollars in the state will be destabilizing for regulated sports betting in Illinois,” the Sports Betting Alliance (SBA) wrote in an email to InGame. “A per bet tax most penalizes small recreational bettors — many of whom are betting a single dollar or two. Under this legislation, these popular bets will get hit with a massive 25% or 50% tax. Customers understand that they will be the ones to bear the cost of this new tax. That’s why Illinois customers sent more 76,000 emails and tweets to their representatives asking them to stop this discriminatory tax. With this change, lawmakers are essentially urging customers — and especially these small dollar bettors – to switch to unsafe and unregulated sportsbooks who defy state consumer protections and generate zero taxes for state priorities. These illegal operators are the big winners from Saturday’s vote.”
The SBA is comprised of BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel.
The numbers game of 20 million wagers
Illinois welcomed its 10th mobile sportsbook in March with the launch of bet365, and is the second-largest market in the U.S. behind New York. But this new surcharge, similar to last year’s switch to progressive tax rates on revenue, impacts FanDuel and DraftKings at far greater levels than any other operator in the state.
| Operator | FY 2025 Volume of Wagers (ends June 30, 2025) | Projected Tax Cost | YTD 2025 Volume of Wagers | Projected Tax Cost |
| FanDuel | 129,581,710 | $59,790,855 | 41,245,148 | $15,622,574 |
| DraftKings | 114,901,009 | $52,450,505 | 37,384,457 | $13,692,229 |
| BetMGM | 12,856,844 | $3,214,211 | 4,545,293 | $1,136,323 |
| Fanatics | 11,726,190 | $2,931,548 | 4,292,563 | $1,073,141 |
| BetRivers | 9,802,741 | $2,450,685 | 3,223,269 | $805,817 |
| ESPN BET | 8,046,769 | $2,011,692 | 2,787,323 | $696,831 |
| Caesars | 5,834,915 | $1,458,549 | 2,157,818 | $539,455 |
| Hard Rock Bet | 4,372,991 | $1,093,248 | 1,698,130 | $424,533 |
| bet365 | 1,292,331 | $323,083 | 1,292,331 | $323,083 |
| Circa Sports | 308,591 | $77,148 | 114,734 | $28,684 |
| TOTALS | 298,724,091 | $125,801,524 | 98,741,066 | $34,342,670 |
The two mobile titans are the only sportsbooks projected to surpass the 20-million wager threshold for Fiscal Year 2025. BetMGM, Fanatics, and bet365 appear capable of hitting that benchmark in FY2026, which starts July 1.
To put the volume of wagering in Illinois via FanDuel and DraftKings in perspective, consider the two would already be paying the $0.50 surcharge if they offered only parlay bets in 2025. FanDuel has already accepted 27.5 million such wagers and DraftKings 22.3 million.
Based on FY2025 totals, FanDuel and DraftKings would account for more than 89% of the projected $125.8 million in tax revenue this proposal would have created and over 85% of the $34.3 million in receipts for the first three months of the calendar year.
What makes the new tax all the more surprising is the progressive rates put in place last July are on pace to meet the $200 million Pritzker sought when he originally proposed raising the tax rate from 15% to 35% in February 2024. The $304.9 million in total state tax revenue for FY 2025 is $148 million more than collected the first nine months of FY2024.
Excluding bet365, the nine mobile sportsbooks in Illinois have paid $156.9 million more in taxes at the new rates compared to the previous 15% levy. An argument can be made using progressive tax rates is having the desired effect for the state: Eight of the nine operators project to move up at least one tax bracket before the end of the fiscal year, with Circa the exception.
But FanDuel and DraftKings are shouldering the heaviest loads at levels similar to the projections of the tax that just passed. The two mobile titans have paid $138 million more in taxes compared to the previous 15% rate in FY2025, accounting for nearly 88% of the increase in mobile sportsbook tax revenue.
FanDuel has paid $75.4 million more in levies, while DraftKings has remitted $62.5 million more. By comparison, Fanatics is the only other mobile licensee that has paid an increase of more than $5 million in FY2025: Its $20.7 million in taxes paid represents an increase of $8.4 million against the previous rate.
Eye-watering effective tax rates
When putting the tax revenue figures together, FanDuel and DraftKings will likely be remitting payments in Illinois at a rate above the 51% New York currently imposes — the highest in the U.S. Both crossed the $200 million revenue threshold for FY 2025 in December in Illinois, resulting in six-plus months of tax remittance at the maximum 40% tier.
When it comes to the new wager surcharge tax, both operators would likely surpass 20 million in volume in September, triggering the $0.50 rate for nine-plus months out of a fiscal year. Additionally, there were no “givebacks” in the Illinois budget as a trade-off to the wager surcharge — Illinois mobile operators are still not permitted to deduct promotional spend against adjusted gross revenue.
Adding the projected $59.8 million in wager taxes to FanDuel’s $132.1 million bill in Illinois in FY 2025, the $191.9 million in total remittances for the first nine months of FY2025 would create an effective tax rate of 50.8%. Using the 9.3% year-over-year growth in the volume of wagers and 9.1% growth in adjusted gross revenue as a projection for the final three months of the fiscal year, FanDuel would be on pace to pay an additional $72.5 million in combined taxes for the final quarter of FY 2025, if the new tax were already in place.
Thus, the total tax bill would have been $264.3 million against $511.9 million AGR, resulting in a projected effective tax rate of 51.6%.
DraftKings nears that at 51.1% with $232.5 million in total taxes against $454.7 million AGR. That is based on applying the 10.9% year-over-year increase in the volume of wagers and 15.8% increase in revenue for the first nine months of FY2025 for April through June.
“This is not the end of this conversation,” wrote the SBA. “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.”
Fanatics also proves an interesting case study. Its projected effective tax narrowly tops 30% with both levies. It has enjoyed tremendous year-over-year growth since acquiring PointsBet’s U.S. assets and projects to have an increase of 73.3% in wagers and a near doubling of revenue against last year. The latter, which would come out to $26.5 million, would also be enough to move Fanatics into the 35% tax bracket for revenue since its fiscal year AGR would top $100 million.
