DraftKings is the latest operator responding to a new tax on sports wagering in Illinois.
The sports betting and fantasy giant announced it is implementing a 50-cent transaction fee on all online wagers placed through DraftKings Sportsbook in Illinois.
The state’s new per-wager tax rate is set to go into effect in July with DraftKings’ transaction fee going into effect on Sept. 1. Illinois will be charging online sports betting operators at least 25 cents per wager after the state’s legislature voted to implement the online sports betting tax last month. The per-wager tax is part of a new state fiscal budget.
The per-wager tax increases to 50 cents per bet after the first 200 million bets in a year. Illinois Gov. J.B. Pritzker plans to sign the budget before the start of a new fiscal year.
Tax adjustments on sports betting in Illinois
The Land of Lincoln is implementing a tax on sports wagers after making changes in 2024.
Last June, Pritzker approved a budget which taxed online sports betting operators on a sliding scale based on adjusted gross revenue. Under Pritzker’s budget, licensed operators in Illinois that generate more than $200 million in annual revenue are taxed at a 40% rate. Operators that don’t meet that threshold for revenue are taxed at a 20% rate.
Illinois had previously taxed online sportsbooks at a flat 15% rate.
“Illinois has been an important part of our growth, and we’re proud to have contributed meaningfully to the state through tax revenue, job creation and a sustained investment in responsible gaming tools and resources,” said DraftKings CEO Jason Robins. “We are disappointed that Illinois policymakers have chosen to more than triple our tax rate over the past two years, and we are very concerned about what this will do to the legal, regulated industry.”
DraftKings is implementing a fee in Illinois after previously considering surcharges.
Last year, DraftKings announced plans to implement a 3-5% surcharge on winning wagers placed in New York, Pennsylvania, Vermont and Illinois. The company abandoned its plans less than a month after the initial announcement. DraftKings backtracked on the surcharges after receiving negative feedback from customers and industry experts.
At that time, FanDuel said it had no plans to implement a surcharge on wagers.
FanDuel to impose a transaction fee in Illinois
Earlier this week, FanDuel said it would be implementing a 50-cent transaction fee on online wagers starting Sept. 1. The Flutter-owned brand made the decision as a result of the “significant increase in the cost of operating in Illinois” as the state implements a per-wager tax. FanDuel said it will nix the transaction fee if Illinois reverses its new tax rule.
