Illinois Sports Betting Surcharge: FanDuel Parent Flutter Unveils New Fees

• Starting in September, FanDuel will apply a 50 cent surcharge per bet made in Illinois.
• Company is the first to respond to state’s recent tax increase, the second in a year.
• DraftKings likely to follow suit, says analyst.

Flutter Entertainment, the parent company of FanDuel, has announced a significant change impacting the sports betting industry: from September 1, it will implement a 50 cent surcharge for every wager placed by bettors in Illinois. This decision is part of the company’s proactive response to the latest hike in sports wagering taxes imposed by the state, directly affecting the landscape of sports betting in the region.

Earlier this month, Illinois announced a new sports betting tax whereby operators will incur a 25 cent levy per wager for the first 20 million bets they process. Once this threshold is surpassed, the charge will rise to 50 cents per wager.

For context, during the twelve-month period spanning from April 24, 2024, to March 25, 2025, both FanDuel and DraftKings—two of the largest online sportsbook operators in the US—booked 164 million and 146 million bets respectively in Illinois. Analysts project that the state’s new tax plan could significantly impact the financial outcomes for both organisations, potentially costing them tens of millions of dollars.

“This decision reflects the substantial increase in the cost of operating in Illinois, driven by the new Illinois Transaction Fee,” Flutter stated. “Following previous tax rate hikes, FanDuel made extensive efforts to absorb costs without transferring these to customers.”

Flutter has stated that should Illinois retract the new tax scheme, it will likewise cease the 50 cent surcharge. CEO Peter Jackson has expressed concerns that such surcharges could disproportionately affect smaller recreational bettors. He commented that Illinois might hinder operators that have made significant investments in the state.

Illinois Likely Invited Flutter Response

Year after year, Illinois continues to raise sports betting taxes, likely encouraging responses such as Flutter’s. Tax hikes in such quick succession may adversely affect larger operators.

Analyst Jeffrey Stantial of Stifel commented, “We believe these back-to-back tax increases, along with the high effective rates and volume-based structures, place a burden on Flutter’s sporting practices designed for a more responsible, recreational betting framework.”

At present, analysts remain hopeful that other states are unlikely to replicate Illinois’ punitive per-wager tax model.

Expect DraftKings to Follow Flutter

With the imminent earnings before interest, taxes, depreciation, and amortization (EBITDA) impacts, it appears that DraftKings is prepared to implement its own surcharge soon.

Jefferies analyst David Katz noted, “Given past practices of DraftKings in similar situations, we estimate that without mitigation, this would pose a ~$70 million EBITDA challenge for DraftKings, prompting action to reduce costs.

According to Katz, both FanDuel and DraftKings could potentially generate an additional $5 million in revenue due to the surcharge and the state’s per-wager tax on the first 20 million bets made by operators.

Essential Facts About Current Sports Betting Tax in Illinois

• New tax applies to the first 20 million bets: 25 cents per wager
• After exceeding 20 million bets, the tax increases to 50 cents per wager
• Flutter plans to cease surcharges if the tax is revoked

Conclusion

The recent decision by Flutter to implement a surcharge on each wager in Illinois highlights how significant tax changes can have broad implications on operators within the sports betting industry. As both FanDuel and DraftKings prepare for the financial impacts of these tax hikes, it remains to be seen how they will adapt to maintain profitable operations while ensuring customer satisfaction.