• Loading stock data...
Sunday, August 24, 2025
The biggest names in sports media. All in one room. Buy tickets now!

Illinois Passes New Sports Betting Tax in Middle of the Night

The Sports Betting Alliance issued a statement calling the sports betting tax “discriminatory, punitive and constitutionally suspect.”

Illinois Gov. JB Pritzker speaks after giving his annual State of the State address on Wednesday, Feb. 19, 2025, in Springfield.
Imagn Images

Sports bettors in Illinois on Saturday logged into their apps and were met with an uncommon warning: the state legislature was considering new taxes.

The tax, which passed minutes before midnight local time on Saturday, will be 25 cents for every bet for a licensee’s first 20 million bets, and 50 cents per bet thereafter. This arrangement came as part of $1 billion in new taxes to ostensibly fund public transit, after a new provision last year raised taxes on sportsbooks from a 15% flat fee to up to 40%. 

Before the new surcharge passed on Saturday, alarm signals were sent out by the sports betting industry. Proxies for FanDuel and DraftKings, the Capulets and Montagues of sportsbooks who have been in a blood feud with each other for years, both tried to warn against the new tax.

The Ringer, sponsored by FanDuel, posted a since-deleted tweet that said, “The Illinois legislature is considering an unprecedented tax on every bet placed on online apps like FanDuel. This would hurt sports fans in Illinois and potentially drive them to the illegal market.” The tweet led to a link at the Sports Betting Alliance to urge politicians to reject the tax. Dan Katz (“Big Cat”) of Barstool Sports, which is sponsored by DraftKings, said in a video that the new tax would be “very bad” and shared the same Sports Betting Alliance link. It has not been common for Katz or The Ringer to engage in political advocacy.  

The Sports Betting Alliance—which consists of FanDuel, DraftKings, BetMGM, and Fanatics—issued a statement calling the sports betting tax “discriminatory, punitive and constitutionally suspect.”

“With this change, lawmakers are essentially urging customers—and especially these small dollar bettors—to switch to unsafe and unregulated sportsbooks who defy state consumer protections and generate zero taxes for state priorities,” the Sports Betting Alliance said. “These illegal operators are the big winners from Saturday’s vote. 

It added that it will continue to fight this tax and potential other similar taxes that might be proposed in Illinois or any state moving forward.

This is the second straight year lawmakers in Illinois have approved a budget hiking taxes on regulated sportsbooks. In the budget passed last May, the Illinois Senate approved a progressive wagering tax increase that changed the sports betting tax from a flat 15% rate to a system based on adjusted gross revenue, meaning larger sportsbooks pay higher taxes.

Adam Hoffer, director of excise tax policy at the Tax Foundation, tells Front Office Sports this is the first fixed-rate per wager tax on sports betting he’s seen. Based on the language of the policy, he says it’ll be “practically impossible” for sportsbooks in Illinois to take $1 bets moving forward.

“It’s going to distort the market, which is not something you generally want tax policy to do,” he says.

Hoffer says perhaps the act of discouraging small-money wagers could reduce the rates of problem gambling. But on the other hand, there will be bettors who will increase the amount of money they place on individual bets because of the tax.

Meanwhile other states could look to replicate this policy in the future. “A lot of states’ tax policies are driven by what they see in other states,” he says. “There’s very much a copycat system.”

Analysts at Truist said in a Sunday research note that the change will most impact the two biggest players—FanDuel and DraftKings—while more moderately affecting those below them, like BetMGM, Fanatics, and Entain. The note also said the change could embolden illegal market operators, and said “we fear other states could look to copy [Illinois]…”

Robert Walker, director of operations at ARMS—which helps retail sportsbooks manage potential risks to their business—tells FOS he read about the new sports betting tax “with a sinking feeling,” and says “it confirms exactly what I’ve been worried about.”

The tax pushed through in Illinois “sets a dangerous precedent,” he says. Expect other states to impose similar taxes on licensed sportsbooks “whenever they need quick revenue.”

Walker, who for more than a decade was the sportsbook director for MGM Mirage’s Las Vegas casinos, says this comes at a particularly challenging time for the legalized sports betting industry, which is facing new competitors in the form of companies like Kalshi that offer sports “prediction” markets.

“This feels like short-sighted revenue grabbing that could drive casual bettors away from legal, regulated platforms,” he tells FOS. “Exactly the opposite of what good policy should accomplish.”

He expects sportsbooks to respond by raising their minimum bet requirements, meaning that sports bettors are the ones who will ultimately feel the tax.

“Make no mistake: this cost will ultimately land squarely on the customer,” Walker says. “The tax may be levied on the operator, but basic economics tells us who really pays. What’s particularly frustrating is how this undermines the competitive position of regulated operators just when they need every advantage they can get against emerging alternatives.”

The emerging alternatives include Kalshi, an exchange-based platform whose sports betting markets have expanded onto Robinhood, which are not subject to state gaming taxes.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

The Honey Deuce Effect: How Tennis Perfected the Signature Cocktail

Sold every 1.5 seconds, they total more than $12 million in sales.
Nov 23, 2024; Minneapolis, Minnesota, USA; Penn State Nittany Lions head coach James Franklin looks at quarterback Drew Allar (15) during the first quarter against the Minnesota Golden Gophers at Huntington Bank Stadium.

Private Equity Enters College Sports—Without the Equity

As college football starts, lending agreements have become PE’s best way in.

SEC Adopts 9-Game Conference Schedule As CFP Changes Loom

The conference matches schedule formats used by the Big Ten and Big 12.
Mo Vaughn

How Michael Bloomberg Jump-Started Mo Vaughn’s Business Career

The Red Sox legend had a sprawling housing empire before starting a podcast.

Featured Today

Dec 21, 2024; Austin, Texas, USA; Texas Longhorns quarterback Arch Manning (16) warms up as the Texas Longhorns prepare to play the Clemson Tigers in the first round of the College Football Playoffs at Darrell K Royal Texas Memorial Stadium.

Schools Are Hesitant to Allow PE Into Their Athletic Departments

Regardless of budget, schools don’t believe the risk is worth the reward.
Oct 2, 2024; Rosemont, IL, USA; Big Ten commissioner Tony Petitti speaks with the media during the 2024 Big Ten Women’s Basketball media day at Donald E. Stephens Convention Center.
August 22, 2025

‘Not Ready to Jump In’: Power 4 Commissioners Aren’t Sold on PE

Top leaders in college sports have yet to see a satisfactory proposal.
Sep 8, 2024; East Rutherford, New Jersey, USA; New York Giants running back Eric Gray (20) returns a kickoff against the Minnesota Vikings during the first half at MetLife Stadium.
August 18, 2025

‘Fauxbacks’ Throw Back to a Retro Uniform That Never Existed

Many throwback jerseys are brand-new designs or “Franken-Unis.”
August 17, 2025

‘Labubu Gang’: The Creepy-Cute Dolls Sweeping Pro Sports

The creepy-cute doll is the hottest collectible—and fashion statement.
Malik Beasley

Malik Beasley Could Still Be Charged in Gambling Probe Despite Feds Dropping..

Beasley’s lawyer is hoping his client can return to the NBA.
Dec 18, 2024; Inglewood, CA, USA; UNLV Rebels defensive back Rashod Tanner (41) celebrates after defeating the California Golden Bears in the LA Bowl at SoFi Stadium.
August 20, 2025

Robinhood Reactivates Sports Contracts in NJ and NV, Sues State Regulators

The suits were filed the same day Robinhood announced new football offerings.
A view of the FanDuel Sportsbook betting area at Belterra Park Cincinnati.
August 20, 2025

FanDuel Enters Prediction Markets, but With No Sports

The company is partnering with derivatives exchange CME Group.
Sponsored

Building A Pro League From Scratch

Front Office Sports and Gainbridge® spotlight what it takes to build a professional women’s soccer league.
Jan 20, 2025; Atlanta, GA, USA; Ohio State Buckeyes running back Quinshon Judkins (1) and quarterback Will Howard (18) celebrate after a touchdown against the Notre Dame Fighting Irish during the second half the CFP National Championship college football game at Mercedes-Benz Stadium.
August 19, 2025

Robinhood to Roll Out Football Prediction Markets

The new event contracts come on the heels of Kalshi’s expanded football offerings.
August 18, 2025

Limitations on Prop Bets Supported by NBA, Players’ Union

The union is trying to combat online and in-person harassment.
Feb 9, 2025; New Orleans, LA, USA; Philadelphia Eagles quarterback Jalen Hurts (1) against the Kansas City Chiefs during Super Bowl LIX at Ceasars Superdome.
exclusive
August 18, 2025

Kalshi Adds Touchdown Props, Over/Unders Amid Legal Uncertainty

The company is not cowed by its legal challenges.
Feb 5, 2025; New Orleans, LA, USA; The ESPN logo at the Super Bowl LIX media center at the Ernest N. Morial Convention Center.
August 15, 2025

New ESPN App to Feature Heavy Betting Integration

The new app launches Aug. 21.