Three of Illinois‘ leading sportsbooks have responded to the state’s new per-wager tax by passing the cost onto their customers via a transaction fee on every bet placed in the state.
But does that decision mean that the money that FanDuel, DraftKings and Fanatics make (or, as they would likely describe it, recoup) from their respective Illinois transaction fees will be taxed in itself, in addition to Illinois’ sliding-scale tax of up to 40% on gaming revenue and its per-wager tax of up to 50 cents?
The Illinois Gaming Board (IGB) did not explicitly confirm when asked by SBC Americas. But a letter sent to licensed sportsbooks may hold the answer.
Reporting for duty
On June 17, the IGB sent out a FAQs notice on the per-wager tax to licensed sportsbooks in which it confirmed that operators will have to pay the tax on all bets “regardless of outcome or payout,” even those made via bonus money or credits or pushed wagers where the stake is returned to the customer. Some voided or canceled bets are exempt, but everything else incurs the tax charge.
Then, on July 10, after FanDuel and DraftKings announced a new 50-cent transaction fee in Illinois and Fanatics detailed its own 25-cent charge, the IGB explained that, while operators are not prohibited from charging fees on sports wagers, they will have to report the revenue they make from those fees on their tax forms.
As well as filling in a new box on their Sports Wagering Monthly Receipts (SMR-1) tax form for the per-wager tax itself, sportsbooks now have to report any additional gross sports wagering receipts not already reflected in the sport-specific gross receipts handle field.
“These fields should be used for any additional revenue received in relation to the conduct of sports wagering,” IGB wrote to operators. “This includes, but is not limited to, per-wager fees not already reflected in the handle fields.”
Other examples of revenue that would qualify include subscription fees, such as the money paid to be part of DraftKings Sportsbook+, a $20-per-month subscription that offers players boosted bets. The operator piloted this program in New York at the start of the year but never expanded beyond that state.
That updated reporting is in place as of the reporting deadline for July 2025, which is at the end of August, although the operators aren’t planning on beginning their per-wager fees until Sept. 1.
Any per-wager fees resulting from bets placed in Cook County, which includes the city of Chicago, must also be reported on the county’s tax forms as well as the state’s.
FanDuel not budgeting for fees being taxable
If Illinois operators do have to pay tax on their pass-through tax mitigation method, it further increases FanDuel and DraftKings’ heavy tax burden. Already, the two biggest U.S. sportsbooks are on the hook to pay Illinois’ highest gross revenue tax rate of 40% and the highest per-wager tax charge of 50 cents.
Meanwhile, the likes of BetMGM and BetRivers, which have chosen to add or raise minimum bet fees in Illinois instead of implementing a per-wager surcharge, would avoid the extra pass-through tax.
Speaking on their respective earnings calls last week, neither FanDuel parent Flutter nor DraftKings executive team seemed sure what they should be expecting.
During the earnings call, which took place after the letter was sent to operators, Flutter CFO Rob Coldrake said outright that Flutter’s financial guidance for FanDuel does not assume that the per-wager transaction fee will be taxable. Flutter stated in its financial release that it expects Illinois’ per-wager tax will only amount to a net cost of $5 million to the company because $30 million of the full impact will be offset by the service charge. Were that charge to be taxable, that would look very different.
“If there are some changes around the way the fee is perceived by the state, then we’ll address that accordingly,” Coldrake added, noting they are monitoring the situation closely.
DraftKings suspects state has different view
Meanwhile, acknowledging that a per-wager tax charge is “kind of uncharted territory,” DraftKings’ CEO Jason Robins noted. While the company does not expect that its fees on Illinois customers will be taxed, the state may be thinking differently.
“Our position is this was a pass-through and it shouldn’t be taxed,” he stated. “I think Illinois has taken a little bit of a different view on it, so we’re going to try to obviously resolve that before we implement the charge.”
Should IGB follow through on taxing the fee, Robins suggested that DraftKings may rethink its per-wager surcharge, perhaps instead shifting its odds pricing.
“I think tweaking pricing is something you need to consider. If it ends up being treated as taxable revenue, then there’s really no benefit to do that [per-wager fee] versus incorporating into the pricing. So that is something that we’d have to consider.”
SBC Americas also reached out to Fanatics, which is a privately held company and does not hold public earnings calls, but the operator did not offer a comment on whether it expects to have to pay tax on its 25-cent Illinois surcharge.
