The announced move is a direct response to a new state tax that goes into effect July 1, 2025. Instead of letting the tax cut into its profits, FanDuel plans to pass the cost on to bettors starting September 1. DraftKings, FanDuel’s main rival, has said it may take similar action, but has not yet confirmed details.
Why the New Fee?
Last month, Illinois lawmakers approved a first-of-its-kind per-wager tax to help close a $1 billion budget gap. The tax will charge sportsbooks 25 cents on each of the first 20 million bets they accept each year, and 50 cents on every bet after that threshold.
Flutter, FanDuel’s parent company, said this tax change “disproportionately impacts lower-wagering recreational customers” and punishes operators who have invested heavily in growing the online market. Peter Jackson, Flutter’s CEO, argued that setting tax rates too high risks pushing bettors toward unregulated offshore sites, which have fewer consumer protections.
If Illinois lawmakers later reverse the new tax, FanDuel Illinois has pledged to remove the 50-cent transaction fee immediately. This option gives the company a way to protect its customers if the state changes course, but it also shows how seriously FanDuel sees the financial impact of the tax on its business.
Impact on Bettors and the Market
For casual bettors who place small wagers—say $2 or $5 per game—the 50-cent fee represents a large percentage of their stake. A $2 bet with a 50-cent fee is like paying a 25 percent tax on the wager, which may discourage some people from betting at all.
Industry leaders warn that higher costs could drive bettors to illegal, offshore sportsbooks that do not charge such fees or pay state taxes. Those sites often lack strong consumer protections, meaning bettors could face higher risks if problems arise with their accounts or payouts.
Illinois sports betting is one of the biggest betting markets in America. Since betting launched in March 2020, Illinoisans have placed more than 1.3 billion wagers, totaling over $48 billion in handle. In 2024 alone, bettors wagered about $14 billion and the state collected nearly $1.7 billion in taxes under the previous flat 15 percent revenue tax.
DraftKings Illinois has indicated it is “anticipating taking action” but has not provided details on whether it will match FanDuel’s fee or offer a different solution. Smaller sportsbooks in Illinois did not meet the 20 million-bet threshold and will pay only the lower 25-cent tax on each wager. They may choose not to charge their customers extra, which could give them a competitive edge over the larger operators.
As the September start date for the fee approaches, Illinois bettors will have to decide whether to continue using FanDuel, switch to another legal app, or seek out offshore alternatives. The situation underscores the balancing act states face when setting tax rates: too low, and they miss out on revenue; too high, and they risk shrinking the legal market.
FanDuel’s surcharge highlights growing tensions between sports betting operators and state governments trying to raise money. How bettors respond will show whether Illinois lawmakers struck the right balance between funding public services and keeping the betting market healthy.
