FanDuel to Introduce Betting Surcharge in Illinois
Flutter Entertainment, FanDuel's parent company, will add a $0.50 charge to every sports bet placed on FanDuel in Illinois starting September 1. The move is in direct response to the new betting transaction fee imposed by the Illinois legislature on authorized sportsbook companies.
Beginning July 1, state-licensed Illinois sports betting apps must charge a per-bet fee per individual, with the first 20 million wagers being charged at $0.25 per wager before increasing to $0.50 afterwards.
This will be in addition to the statewide hike in the state's sports wagering taxes implemented in 2024, which also imposed increased taxes on sportsbook revenues based on graduated brackets as a percentage of the revenue level.
FanDuel absorbed the extra expense of the 2024 rate hike without affecting its pricing model or passing on the costs to customers. However, Flutter has reshaped its model with the introduction of the new per-wager transaction fee.
The tier system, escalating at the 20 million-bet mark, penalizes high-volume operators like FanDuel and DraftKings, who account for most of the Illinois sports betting industry.
The company explained in a press release that the $0.50 fee that customers will pay will cover the rising cost of conducting business with the state. It added that the fee will be automatically imposed if Illinois were to remove the transaction fee in the future.
Illinois Tax Increase Follows Wider Trend
Flutter CEO Peter Jackson denounced the extra tax as disproportionately charging the state's small-stakes gamblers while penalizing long-term bettors. He also stated that the policy could backfire in the name of consumer protection, as it would lead bettors to offshore, untaxed, and unregulated sportsbook companies that pay no taxes or charges to the state and remain unregulated.
“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,” Jackson said.
Some industry stakeholders have agreed, arguing that the policy will reduce the tax base rather than expand it. Customers will resort to affordable offshore products beyond the state's regulatory purview.
Illinois is the latest among several U.S. states rewriting sports betting tax laws to reap more income.
Louisiana passed a law last month increasing its own sports gambling tax rate from 15% to 21.5%. That bill, sponsored by Rep. Neil Riser and passed in landslide majorities by the House and Senate, is waiting for the governor's signature to become law.
The Louisiana tax increase is part of a plan to finance college athletics in Louisiana. Twenty-five percent of the new tax collections will go toward the new Supporting Programs, Opportunities, Resources, and Teams (SPORT) Fund, providing approximately $1.7 million annually to Louisiana's public universities in the NCAA Division I.
The state's total sports betting revenue at the new rate will be approximately $77 million per year, with $20 million going into the new fund.
