Maybe you’ve heard and maybe you haven’t, but lawmakers in the Land of Lincoln imposed a per-bet tax on online sportsbook operators that kicked in at the start of July.
As a result, some mobile bookmakers are passing on the added costs to Illinois bettors. Others have a different plan, and have raised the minimum amount their players must bet.
- Illinois introduced a new per-bet tax on online sportsbooks, charging 25 cents per bet up to 20 million bets and 50 cents afterward, prompting operators to find ways to offset the added cost.
- Many sportsbooks are passing costs to bettors through new transaction fees (e.g., DraftKings and FanDuel charging 25 or 50 cents a bet) or by increasing minimum bet amounts (e.g., BetRivers from 10 cents to $1).
- Policies vary by operator, giving Illinois bettors the chance to shop around for the lowest fees or minimums, especially during the upcoming football season when betting activity peaks.
The new per-bet tax is 25 cents for each of the first 20 million bets an Illinois sports betting site takes in any given year, and then 50 cents per wager after 20 million bets. With those added costs hanging over them, most of the state's online sportsbooks have adopted measures to deal with the extra expenses.
In other words, Prairie State sports bettors may find themselves paying a “transaction fee” or making a bigger wager than usual to meet new minimum betting requirements. Some bettors may have already noticed some changes.
Taxing times
Here is what every online sportsbook in Illinois is doing in response to the new per-bet tax and what it might cost bettors:
- bet365: A 25-cent surcharge will be applied to all bets below $10.
- BetMGM: Minimum $2.50 bet size is in place. “BetMGM is a surcharge-free zone for now,” CEO Adam Greenblatt said recently.
- BetRivers: Minimum $1 bet (used to be 10 cents). However, its owner, Rush Street Interactive's CEO recently said it's “remaining flexible” heading into the NFL regular season. In other words, the sportsbook operator could change its approach.
- Caesars: A 25-cent fee.
- Circa: After initially saying it would do nothing, Circa moved to a $10 minimum wager starting Sept. 1. “After thoughtful consideration, we believe the best course of action for a low-hold, high-volume sportsbook such as Circa Sports is to raise the minimum wager in Illinois," CEO Derek Stevens said in a statement on Aug. 15. "We are reluctant to compromise our best-in-class betting splits or charge our customers a per-bet fee."
- DraftKings: Bettors could pay either a 25-cent or 50-cent “transaction fee” on online sports wagers. While the Boston-based company first said it would impose a flat 50-cent fee, it later clarified its rules. However, DraftKings will not "pass through" the per-bet tax on parlays of $10 or more, single bets of $50 or more, bonus bets, and bets placed by customers with "Silver" or higher loyalty status.
- ESPN BET: A $1 minimum bet requirement is in place as of Aug. 8, up from the previous 10-cent minimum.
- Fanatics: Bettors will pay a 25-cent transaction fee for all wagers starting this fall.
- FanDuel: 50-cent transaction fee for all bets. (NOTE: DraftKings, Fanatics, and FanDuel all stated they'd remove their transaction fees for bettors if Illinois lawmakers remove the per-bet tax on operators. Don’t hold your breath, though; the state legislature adjourned until the fall.)
- Hard Rock Bet: $2 minimum bet is in place.
As you can see, not everyone is going the same route in trying to offset the the added costs of the new per-bet tax. That presents Illinois bettors with an opportunity to shop around if they like, to find the book (and the potential added cost) that works best for them. It also offers operators a chance to differentiate themselves.
“We note that others have introduced a surcharge, passing on the full cost of that surcharge to players in the short term,” BetMGM’s Greenblatt said recently. “We feel like this is a relative competitive opportunity for BetMGM and other players that feel that that might be somewhat punitive. So, look, what happens in the future will depend on the financial impact of the approach we're taking at the moment. But we want, at least for now, BetMGM to be a surcharge-free zone.”
The Illinois Gaming Board also published several clarifications when it comes to the new per-bet tax and how it applies. Among other things, the regulator said the new per-wager tax will apply to bonus bets, and that parlays and round robins will count as a single bet.
According to the IGB, the per-bet tax will apply to "pushed" bets as well. Put differently, you could push on a bet and still lose 25 or 50 cents because of a transaction fee. Voided bets aren't subject to the tax.
"The per wager tax incurs once the customer places the wager," the IGB says. "Whether the wager wins, loses, pushes, or is cashed out early does not change the tax liability under the statute."
