FanDuel, DraftKings Add Illinois Transaction Fee in Response to New Tax

FanDuel has issued an aggressive response to new sports betting taxes recently passed in Illinois. 

The sportsbook’s parent company Flutter announced Tuesday morning that beginning Sept. 1 each bet made on FanDuel will be subject to a 50-cent transaction fee. Last week, with little notice, Illinois passed new taxes on sportsbooks in the middle of the night subjecting them to a 25-cent tax for the first 20 million bets and 50 cents per bet thereafter. 

“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,” Flutter CEO Peter Jackson said in a statement. “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.”

On Thursday, DraftKings announced it was following suit and adding its own 50-cent transaction fee.

There are a lot of people who bet small bets and/or use longshot parlays effectively as lottery tickets. For someone who makes $2 wagers, the new fee is a 25% tax on every bet. 

In his statement, Jackson also expressed concern the new taxes would push gamblers to unregulated offshore markets with less consumer protection. 

By publicizing the transaction fees, FanDuel is essentially letting its customers know it’s a separate cost on them, imposed by the state. It remains to be seen whether other operators will follow suit, but given that FanDuel is a bellwether in the industry, it would be a relatively safe bet. 

Last year, in high-tax states like Illinois in New York, DraftKings had planned to implement a winners’ “surcharge,” but walked it back after widespread backlash.