Placing an online bet in Illinois is expected to be more expensive this football season, as sportsbooks react to a tax increase that has some bookmakers questioning the viability of the betting business in the state.
FanDuel announced Tuesday that, beginning Sept. 1, it plans to charge bettors a 50-cent transaction fee on every bet, win or lose, placed with its online sportsbook in Illinois.
The company says the fee is its response to a recent tax increase in the state that will charge sportsbooks 25 cents on the first 20 million wagers it accepts online and 50 cents on each additional bet.
The Illinois per-bet tax passed swiftly during a deadline weekend on May 31 and included in the state budget. The per-bet tax is awaiting Gov. JB Pritzker's signature and is slated to go into effect July 1. It's the second tax increase for Illinois sportsbooks in the last year. A spokesperson for the Illinois Gaming Board said they are reviewing the matter.
"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," Peter Jackson, CEO of Flutter, FanDuel's parent company, said in a statement announcing the planned transaction fee. "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.
"We also believe the introduction of the Illinois Transaction Fee will likely motivate some Illinois-based customers to bet with unregulated operators. These operators do not contribute tax revenue to the state, will not collect the newly announced transaction fee and do not offer the same levels of customer protection that regulated operators provide."
FanDuel and DraftKings are the only two sportsbook operators expected to easily meet the threshold of 20 million online bets in 2025. A spokesperson for DraftKings said Tuesday that the company "anticipates taking action and expects to share more information soon."
The Sports Betting Alliance, the lobbying group representing DraftKings, FanDuel, BetMGM and Fanatics Sportsbook, believes the per-bet tax will hit small, recreational bettors the hardest.
"A per bet tax most penalizes small recreational bettors -- many of whom are betting a single dollar or two," the SBA said last week in a statement reacting to the passing of the bill. "Under this legislation, these popular bets will get hit with a massive 25% or 50% tax."
FanDuel told the Wall Street Journal in January that 90% of same-game parlays are for $30 or less, while 60% are $5 or less.
Las Vegas casino owner Derek Stevens, whose sportsbook Circa Sports also operates in Illinois, said his company was taking a wait-and-see approach and weighing its options, including potentially leaving the state or changing its approach.
"I don't know in Illinois if sports betting is viable in the current environment," Stevens said.
Disclosure: ESPN has a business partnership with Penn Entertainment, the company that operates the ESPN BET sportsbook.