Illinois Per-Wager Sports Betting Tax Tops $10 Million In September

The Illinois Gaming Board (IGB) reported Thursday $10.6 million in September tax receipts from the state’s per-wager surcharge as DraftKings and FanDuel crossed the 20 million wager threshold and triggered the higher 50-cent surcharge on each bet.

The two sports betting titans accounted for close to $8.6 million of the total per-wager taxes accrued by the 10 digital operators. DraftKings had a state-high 11.25 million accepted bets and remitted $4.1 million. FanDuel had a tax bill of nearly $4.5 million, totaling nearly 11 million wagers in September. Both sportsbooks accepted more than 26.9 million wagers in the first quarter of Fiscal Year 2026.

The pair began implementing countermeasures to the surcharge Sept. 1. FanDuel instituted a 50-cent surcharge on all wagers. DraftKings took a more nuanced approach, telling InGame in September it would bypass the surcharge on parlays of $10 or more, single-event wagers of $50 or more, bonus bet tokens, and for players who have Silver tier or higher loyalty status.

Illinois became the first state to institute a per wager surcharge in May when it was passed as part of FY2026 budget. Legislators overhauled sports betting tax rates last year, switching from a flat 15% rate to progressive ones ranging from 20% to 40% based on revenue thresholds.

So much to discuss

In terms of traditional monthly numbers, the IGB reported $100.7 million in adjusted gross revenue (AGR) as the statewide hold was 7.1% against $1.42 billion handle. The win rate was fourth-lowest among 31 states that reported handle and revenue figures for September but also in line with year-over-year declines across most commercial jurisdictions. Operator winnings plunged 26.2% compared to September 2024 despite a 9% bump in handle.

State taxes from sports betting revenue totaled $27.8 million, with FanDuel and DraftKings again shouldering much of the burden as the only two operators who have moved off the 20% base rate this fiscal year. Cook County received $1.1 million in remits for its 2% levy on revenue generated within county limits, which includes the city of Chicago.

Source: Illinois Gaming Board

None of the other eight online operators reached five million wagers in the first quarter of the fiscal year, but Fanatics (4.67 million) and bet365 (3.83 million) have the potential to reach 20 million given the size of the Illinois marketplace and the Chicago Bears contending for a playoff berth.

Despite the increase in handle, the Sports Betting Alliance (SBA) seized upon the 15.2% downturn in mobile wagering volume compared to the 35.7 million bets placed in September 2024. The SBA feels the 5 million fewer wagers are a “warning sign for policy makers” as the Chicago City Council ponders adding a 10.25% tax on revenue generated within the city to help address a $1.3 billion shortfall in the 2026 budget.

“The Illinois Gaming Board data released today is astounding. Illinois sports fans are fleeing the legal betting market in favor of the cheaper illegal and unregulated options — and the regulated legal market is paying the price,” said Maura Possley, Sports Betting Alliance of Illinois spokeswoman, in a statement.

“While legal markets all across the country are growing, the Illinois market is shrinking thanks to the state’s recent tax hike. This data is a warning sign for Chicago, Illinois, and other state policy makers that over-taxing legal betting will have profound negative ramifications for the sustainability of the legal market and future tax revenues for state coffers.” 

Parlays provide ammunition for everyone

One of the arguments against the per-wager surcharge was that it would take away the creativity many bettors use for an expansive multi-leg parlay with a wager between $1 and $5 that is akin to a lottery ticket, given the long odds of having every leg of the parlay hit.

In terms of volume, that was where most of the decline the SBA cited took place. After removing first-year operator bet365 to create like-for-like comparisons, the September 2025 volume of parlays plunged 21% to 17.1 million. That was less than the 18.6 million such wagers that FanDuel and DraftKings alone accepted in the prior September.

Those operators had data points that will be further scrutinized in the coming months. Their 13.7 million parlay bets represented a 26.5% decline; DraftKings had a steeper drop in volume at 32.7% to 6.1 million, FanDuel was off 20.6% to 7.5 million.

DraftKings, though, may have found something by not passing its surcharge onto bettors who make $10-plus parlay wagers. Year-over-year handle increased 19.1%, and the average wager increased 76.8% — more than $11. FanDuel saw an 18.7% uptick in the average wager amount for parlays but also a 5.7% decrease in handle.

The bottom line remains that operators generate most of their revenue from parlays. And after four months of getting hammered, the Illinois betting public finally rose up to regain some pride and momentum. The house claimed $59.3 million in parlay winnings, but the 13% hold against $454.8 million in completed events handle was the lowest since holding operators to 9.7% in March.

FanDuel reaped $25.3 million in revenue and had a 16.5% hold, tops among mobile books that had at least $1 million in parlay winnings. It also ended a four-month run of win rates of 22.9% or better. DraftKings had a meager 10.7% win rate in keeping $16.9 million; its previous four monthly holds were 21.3% or higher.

Fanatics ($4.4 million) and bet365 ($3.5 million) were the only other operators to secure $3 million in parlay revenue, and Hard Rock Bet and ESPN Bet were held to single-digit holds. Fanatics had a 10.4% win rate as the third and last operator to generate at least $25 million handle.

Next talking point: Effective tax rates

The SBA spokeswoman hinted at the “over-taxing of legal betting” in her statement. FanDuel and DraftKings are already rapidly climbing the Illinois tax bracket ladder to the point where October’s revenue report could focus on the two juggernauts and their effective tax rate when combining revenue and per-wager levies.

FanDuel reached the 35% bracket for revenue after its $39.9 million in total winnings pushed it over $100 million AGR for the fiscal year. When subtracting the Cook County tax, FanDuel paid an effective tax rate of 34.7% for the first quarter of FY 2026. It also projects to hitting the top tier 40% tax rate in December.

DraftKings is not far behind, finishing September $193,000 shy of the 35% tax bracket. While the IGB figures list DraftKings remitting nearly $8 million in per-wager tax receipts, it is possible the figure is unaudited and could be revised upward since its total wagers are comparable to FanDuel. Still, it had a 34.4% effective tax rate when combining revenue and per-wager remits.

The 1-2 punch of levies provided $98.9 million in receipts for the state in the first quarter of the fiscal year, an increase of $33.7 million. Taxes from operator revenue were up $12.6 million as the $298.2 million in winnings were up 11.7%.

No other operator has progressed to the 25% rate, with Fanatics currently closest after totaling $25.7 million in the first three months of FY 2026. It was a clear-cut third in revenue at $7.2 million in September but also had a mediocre 6% hold against $119.2 million handle. Bet365 was the only other mobile book to finish above $5 million, crafting a near-9% win rate to reap $5.7 million in winnings from $63.7 million worth of wagers.