Online sports betting in Illinois will be subject to taxation, effective from July 1.
Belter Burden for Betting Titans: Millions in Extra Expenses on the Horizon
Gearing up to leave a massive dent in the wallets of major sports betting bigwigs, Illinois lawmakers have approved a per-bet tax on all web-based sports wagers. This contentious tax, incorporated into the state's fiscal 2025 budget on the final day of May, is scheduled to take effect on July 1, provided Governor J.B. Pritzker signs off - a promise he's already made.
Under the new fiscal framework, sportsbooks will now have to fork over 25 cents per wager on the initial 20 million online bets each year. For every bet made beyond this threshold, they'll pay 50 cents apiece. This new tax comes on top of Illinois' already aggressive progressive tax structure on the gross gaming revenue (GGR) of sportsbooks, making the state one of the steepest markets in the nation for heavyweights like FanDuel and DraftKings.
A Financial Knockout for Operators: Millions Down the Line
The financial fallout of these additions is substantial. Experts at Citizens JMP forecast that the extra wager tax will slice into FanDuel and DraftKings' adjusted EBITDA by a joint sum of around $80 million in 2026. Notably, these two giants are the only operators currently surpassing the 20 million wager threshold, which triggers the higher 50-cent rate.
This jaw-dropping tax arrives just one year after Illinois implemented its progressive tax model, which taxes the top-earning operators' GGR at rates up to 40%. married with the new per-bet fees, Illinois is sending a crystal-clear message: if you're garnering substantial revenue from Illinois bettors, you'll pay for it.
According to Chicago Tribune reporting, the state expects the per-bet tax to generate around $36 million annually in additional revenue.
Sportsbooks and Industry Groups Counterpunch
As predictable as a fourth-quarter Hail Mary, the sports betting industry is peeved. spearheaded by the Sports Betting Alliance (SBA), a coalition representing FanDuel, DraftKings, BetMGM, and Fanatics, a campaign was launched to challenge the tax proposal the moment it hit the drawing board.
Their offensive plays included email and social media blitzes directed at Illinois residents, exhorting them to reach out to legislators. By the time the bill passed at 10 p.m. on May 31, just two hours before the deadline, the SBA boasted that over 55,000 emails had been sent to lawmakers in opposition.
Even Rob Gronkowski, former NFL star and current FanDuel ambassador, joined the crusade on social media. The cry: this tax could hurt consumers almost as much as operators.
After the bill's passage, the SBA issued a firm statement, warning the tax may be "crippling" and potentially push bettors to unregulated offshore sportsbooks, which steer clear of taxes and consumer protections.
"Illinois lawmakers are effectively urging customers-especially small-time bettors-to defect to unregulated betting sites that shirk state-mandated consumer protections," the SBA admonished.
Responsible Gaming Advocates Also Voice Concerns
Opposition isn't exclusive to the sportsbooks themselves. The Responsible Online Gaming Association (ROGA), a group that includes the SBA's four members plus PENN Entertainment, bet365, Hard Rock Digital, and Bally's, also protested the tax.
Their primary worry: the tax might encourage players to place larger but fewer wagers, which could run counter to responsible gambling principles.
"Illinois' proposed tax on every sports wager risks undermining responsible gaming," ROGA asserted. "Such a tax might incentivize players to wager larger amounts, or move to unregulated operators that lack stringent responsible gaming protections."
Despite industry opposition, the budget passed before the midnight May 31 deadline, effectively setting the per-bet tax in stone.
Illinois' Short-Term Win, Long-Term Question Mark
While sportsbook operators argue that the tax might cripple the regulated market, Illinois lawmakers seem to have their eyes firmly set on short-term revenue gains. The projected $36 million generated from the per-bet tax is but one piece of a larger fiscal puzzle, but its passage without major debate or hesitation indicates their priorities.
Interestingly, the SBA and ROGA also pointed out a missed opportunity: regulated iGaming. The SBA claims an online casino market could bring in $1 billion in new revenue- far surpassing the returns expected from the per-bet tax. However, lawmakers declined to explore this possibility, at least for now.
"It's incredibly disheartening that the legislature opted to pass this tax and disregard the $1 billion in new revenue that a regulated and consumer-focused iGaming market would provide," the SBA added.
What's Next for Betting Fans and Operators in Illinois
For hopeful bettors in Illinois, immediate implications won't be noticeable – directly, at least. The tax targets operators, not players. But over time, books might modify betting odds, curtail promotions, or pass on costs in other ways to accommodate the new burden.
For operators, particularly smaller ones trying to compete with FanDuel and DraftKings, the hurdles just became even steeper. High operational costs, pile-up taxes, and intensified competition may make Illinois a less attractive market for new entrants.
And for lawmakers, the roll of the dice is this: Will these aggressive taxes ensure consistent revenue, or will they ultimately strangle the regulated market they're attempting to milk?
Only time-and betting slips-will reveal all.
- The per-bet tax on sports wagers in Illinois will cost FanDuel and DraftKings a combined $80 million in 2026, according to Citizens JMP.
- Under Illinois' new fiscal framework, sportsbooks will pay 25 cents per wager on the initial 20 million online bets each year, and 50 cents apiece for every bet made beyond this threshold.
- The Sports Betting Alliance (SBA), which represents FanDuel, DraftKings, BetMGM, and Fanatics, launched a campaign to challenge the tax proposal, citing concerns about potentially pushing bettors to unregulated offshore sportsbooks.
- The Responsible Online Gaming Association (ROGA) also protested the tax, expressing worries that it might incentivize players to wager larger amounts, which could run counter to responsible gambling principles.
