Fanatics Sportsbook will join FanDuel and DraftKings in adding a surcharge to all wagers placed in Illinois.
According to Sports Business Journal, the quickly-growing operator will charge customers $.25 for every wager they place, win or lose. This move directly responds to Illinois Gov. J.B. Pritzker’s decision to implement a per-bet tax on every transaction at legal sportsbooks.
Key takeaways
- The $.25 surcharge is less than DraftKings' and FanDuel's $.50.
- Fanatics is unlikely to have to pay $.50 per accepted wager due to its market share.
- Illinois had the second-most lucrative sports betting market in 2024.
Fanatics, like FanDuel and DraftKings, confirmed it will remove the surcharge if the per-bet tax is removed.
Illinois' per-bet tax charges operators $.25 for each of their first 20 million transactions and $.50 for each one beyond that. The counter would reset at the end of every year.
While FanDuel and DraftKings will be liable for paying the full $.50, Fanatics should only be on the hook for $.25 because of its smaller market share.
Gov. Pritzker signed the new tax penalty into law on Monday, June 16, and it went into effect on Tuesday, July 1. A report from the Chicago Tribune estimated that the new penalty will create an additional $36 million in funding for the state.
Illinois also implemented a tiered tax system last year that hiked its 15 percent flat rate to 20-40 percent, depending on the operator's revenue. That change went into effect on July 1, 2024, while sportsbooks generated $1.2 billion in combined annual revenue—the second-highest yearly total in the country, behind New York.
The state also generated $268.3 million in sports betting taxes, a 75 percent year-over-year increase.
Sportsbooks hit back
DraftKings first proposed the idea of a surcharge last summer in “high-tax” states, or those with rates above 20 percent. The idea was quickly scrapped following a strong public backlash.
However, the surcharge returned once Illinois introduced its per-bet tax on top of its tiered tax system. The combination of those two brings the effective tax rate for the top operators to 57 or 60 percent, depending on if they hit the 20 million mark for accepted wagers.
That would easily be the harshest tax standard in the country, outdoing New Hampshire, New York, and Rhode Island (51 percent).
Seven other online sportsbooks are licensed to operate in Illinois: bet365, BetMGM, BetRivers, Caesars, Circa, ESPN Bet, and Hard Rock Bet.
None of these operators have announced plans to introduce surcharges in Illinois. Pritzker has remained committed to his per-bet tax, but surcharges – which effectively lower the customers’ betting odds – will make profitability harder for bettors to achieve.
Illinois is the only state with a per-bet sports wagering tax.
