DraftKings is prepared to retaliate against Illinois’ new per-bet sports betting tax that could cost the company nine figures annually.
“In response to the recent and prior mobile sports wagering tax increases in Illinois, DraftKings anticipates taking action and expects to share more information soon,” a DraftKings statement read, per ESPN’s David Purdum.
FanDuel Sportsbook already implemented a $.50 surcharge on every wager placed in Illinois. It also promised the surcharge would be removed as soon as Illinois got rid of its new tax standard.
DraftKings mum on what it will do
The new tax structure on Illinois sports betting is the first of its kind in America. The Illinois Gaming Board will collect 20% to 40% of operators’ revenues, the exact percentage increasing in accordance with the operator’s revenue, then 25 cents to 50 cents on every accepted wager.
Companies will owe $.25 for their first 20 million online sports bets and $.50 for every bet beyond.
DraftKings Sportsbook and FanDuel Sportsbook are the only operators who accepted more than 20 million in bets since they joined the state’s gaming market. They also contributed more than $300 million of Illinois’ $370 million in sports betting taxes last year, the first under the 20% to 40% tax structure that was increased from a flat 15% in 2024.
Legal Sports Report noted that the per-bet tax would’ve cost the companies at least $140 million more as part of $159 million in additional annual tax collections.
Peter Jackson, CEO of FanDuel’s parent company, Flutter Entertainment, said this week that bettors who wager low amounts will be the most affected by the per-bet fee.
“It is important to recognize that there is an optimal level for gaming tax rates that enables operators to provide the best experience for customers, maximize market growth, and maximize revenue for states over time. 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.”
DraftKings did not expound on what its plans for a response to the new tax include.
DraftKings CEO touts transparency
DraftKings last year suggested a $.32 surcharge on all winning wagers in "high-tax" states, using the example of a customer winning $9.68 for a $10 bet placed at +100 odds. It scrapped that idea after receiving strong public backlash.
The states targeted included New York (51%), Pennsylvania (36%), Vermont (31%), and Illinois.
DraftKings’ decision was revealed during its Q2 2024 earnings call as a way to keep the effective tax rate around 20%. Last August, DraftKings CEO Jason Robins said the company would side on openness when it comes to surcharges.
"I know there's maybe benefit to hiding [the surcharge], because many people don't notice, but I think over the long term customers appreciate transparency and even if they don't love that, their state implemented a high tax and some of that is being passed along. I think they prefer that to not knowing if it were buried in the pricing or something.”
Sportsbook companies distanced themselves from the idea of a surcharge after it was proposed by DraftKings. FanDuel’s decision to implement the charge adds an enormous amount of influence and economic backing to the battle.
Customers will bear the brunt of the surcharge. Bettors who risked $10 on -110 odds previously needed to win about 52.4% of their best to attain profitability. That number is up to 55.6% with the addition of a $.50 surcharge.
As noted in Jackson’s statement, the surcharge also affects lower-betting players significantly more than high-rollers since the amount is fixed and not a percentage of the stake.