Illinois Introduces New Per-Bet Tax on Online Sports Betting
Illinois is making headlines in the gambling industry with the passage of a new law that imposes a per-bet tax on online sports wagers. The legislation, part of the state’s Fiscal Year 2025 budget, is set to take effect on July 1, 2025. This move is expected to have significant financial implications for both sportsbooks and bettors, with major operators like FanDuel already announcing changes to offset the increased costs.
Details of the New Law
Under the new law, Illinois will tax sportsbooks 25 cents per wager for the first 20 million online bets placed each year. Once that threshold is surpassed, the tax rate doubles to 50 cents per wager for every additional bet within the fiscal year. This per-bet fee is in addition to the state’s already steep progressive tax on sportsbook gross gaming revenue, which ranges from 20% to 40% for the highest-earning operators.
Illinois lawmakers passed the measure in the final hours of the legislative session, aiming to generate an estimated $36 million in additional annual revenue for the state. The funds are earmarked for the state’s General Revenue Fund and are part of a broader $800 million tax package included in the $55 billion budget.
Impact on Sportsbooks
The new tax structure will hit large operators the hardest, particularly FanDuel and DraftKings, which are the only sportsbooks in Illinois currently exceeding the 20 million wager threshold annually. According to industry analysts, the added costs could cut into these companies’ adjusted EBITDA by a combined $80 million in 2026.
Previously, Illinois sportsbooks paid $276 million in taxes in 2024, with FanDuel and DraftKings contributing $74 million and $67.9 million, respectively. The new per-bet tax would have added an estimated $159 million to last year’s total, based on current betting volumes.
FanDuel’s Response: A 50-Cent Transaction Fee for Bettors
In response to the new tax, FanDuel has announced it will begin charging a 50-cent transaction fee on every bet placed in Illinois starting September 1, 2025. This fee will apply to all wagers, regardless of size or outcome, and is intended to directly offset the increased operational costs imposed by the state’s new tax policy.
Flutter, FanDuel’s parent company, stated that the new fee is necessary to maintain business viability in Illinois, given the “punishing” tax rates now in effect. The company also expressed concern that the new taxes and transaction fees will disproportionately impact small, recreational bettors—those who often place low-dollar bets and could see a significant percentage of their wager eaten up by fees.
“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.”
— Peter Jackson, CEO of Flutter
Industry and Consumer Reactions
The reaction from both the industry and bettors has been swift and critical. The Sports Betting Alliance, which represents major operators including FanDuel and DraftKings, condemned the tax as “discriminatory” and warned it could destabilize the regulated market in Illinois. The group argues that the per-bet tax will push price-sensitive bettors toward unregulated offshore sportsbooks, which do not contribute tax revenue or offer the same consumer protections.
Many bettors, particularly those who place small wagers, are likely to feel the pinch. For example, a $2 bet would now carry a 50-cent fee, effectively imposing a 25% surcharge on the wager. This could discourage casual participation and reduce overall betting volume, potentially undermining the state’s revenue goals.
Broader Implications and What’s Next
Illinois’ move to a per-bet tax model is being closely watched by other states and industry stakeholders. The law’s passage, particularly with its last-minute approval and lack of industry consultation, has raised concerns about the stability and growth of regulated sports betting markets.
While FanDuel is the first major operator to announce a direct transaction fee for bettors, it remains to be seen whether other sportsbooks will follow suit. DraftKings, for instance, has not yet indicated if it will implement similar charges, but industry observers expect more operators may be forced to pass on costs to consumers if the new tax structure remains in place.
Final Words on this sad story for bettors
The new per-bet tax in Illinois, marks a significant shift in how the state approaches sports betting taxation. With FanDuel’s decision to introduce a 50-cent transaction fee per bet, the financial burden of the new law will be felt not just by operators, but by Illinois bettors themselves. As the law takes effect and the industry adapts, both policymakers and consumers will be watching closely to see how these changes impact the state’s sports betting landscape and its broader goals of revenue generation and market stability.
