FanDuel parent company Flutter Entertainment announced Tuesday it will institute a 50-cent surcharge on all wagers in Illinois.
The per-bet tax is a response to Illinois’ recent tax hike, which will charge sportsbooks 25-to-50 cents per accepted wager in addition to the 20-to-40% revenue tax.
Key Takeaways
- Flutter said that surcharge would disappear if Illinois repealed its per-bet tax.
- DraftKings last year scrapped its proposed surcharge following negative public reaction.
- $10 bettors would need to win more than 3% more of their bets to make a profit with the surcharge.
Flutter did not pull any punches in its announcement, stating the surcharge, which will go into effect in the fall, was directly caused by the Illinois legislature.
“In response, from September 1, 2025, FanDuel, Flutter’s US market-leading brand, announces that it will introduce a new $0.50 transaction fee on each bet placed on its platform in Illinois,” Flutter wrote in a press release. “This decision reflects the significant increase in the cost of operating in Illinois driven by the new Illinois Transaction Fee.”
The company added that it will remove the 50-cent per-bet charge “immediately” if Illinois decides to get rid of its controversial innovation.
Flutter claimed it settled on the surcharge as a last resort.
“Following the 2024 [Illinois tax] increase, extensive efforts were made by FanDuel to absorb the cost fully without impacting customers,” read the release.
The Illinois Gaming Board is reviewing FanDuel’s proposed transaction fee.
DraftKings announced in August it planned to implement a small surcharge on wagers placed in high-tax states, which included Illinois, New York, Pennsylvania, and Vermont. It was forced to walk back those plans after a strong public outcry and backlash from customers across the country.
“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 spokesperson told Covers' Geoff Zochodne.
Winning becomes even harder
State gaming regulators can set the gaming tax rate for their jurisdiction at their own discretion without federal influence or oversight. That’s led to a great disparity in tax standards, with rates ranging from 6.75% to 51% of gaming revenue.
Tennessee also has a unique system of taxing operators based on their handle as opposed to their revenue.
“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,” Flutter CEO Peter Jackson said.
“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.”
Jackson’s identification of “lower wagering” customers represents a basic math problem.
If most casual bettors risk about $10 per bet, a 50-cent surcharge represents 2.5% of their stake. Compare that to high-roller bettors who can regularly put $10,000 on the line, of which the surcharge is only 0.005% percent.
A surcharge also makes the path to profitability much harder to obtain.
A bettor who risks $10 on -110 odds needs to win 52.4% of their bets to turn a long-term profit. That rises to a 55.6% minimum with the addition of the surcharge.
Offshore sportsbooks to benefit?
A sportsbook surcharge – even if done in response to start officials – effectively lowers odds and punishes customers. There’s concern that this could drive bettors to unlicensed sports betting platforms that offer betting odds since they do not have to pay state taxes.
“We also believe the introduction of the Illinois Transaction Fee will likely motivate some Illinois-based customers to bet with unregulated operators … [which] do not offer the same levels of customer protection that regulated operators provide,” said Jackson.
Illinois generated $276 million in tax revenue from FanDuel and DraftKings last year. The per-bet tax would’ve added an additional $159 million.
