Effective July 1,Illinois will levy a per-bet fee on all sports wagers handled by licensed operators within the state.

Flutter, the parent company of FanDuel, stated that this decision directly addresses the increased operational costs in Illinois, which stem from a substantial increase in the betting tax rate earlier in 2024.

Flutter Entertainment CEO Peter Jackson said in the 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.”

after the tax rate hike in 2024, FanDuel absorbed the costs to shield customers. However, the new per-bet fee prompted a different strategy.

Flutter has indicated that should Illinois reverse its decision on the transaction fee, the $0.50 charge will be rescinded promptly.

Flutter stated that it “sees a need for an optimal balance on tax rates that allow states to generate revenue”, while allowing “operators to provide a strong customer offering and compete effectively.”

The illinois tax stipulates that licensed sportsbooks pay $0.25 per bet for the first 20 million wagers placed in a fiscal year, and $0.50 for each subsequent wager.

Industry Reacts to Fee Increase

“Not a good, logical, well-thought-out design.”

The state’s budget amendment has stirred apprehension within the sports betting industry regarding its effects on both operator viability and the overall consumer experience.

Industry representatives and sportsbook executives have strongly criticised the new provision, deeming it economically detrimental and structurally flawed.

Derek Stevens,CEO of Circa Sports,publicly commented on the policy during an appearance on the Vegas Stats & Information Network’s “Follow the Money” show.

Stevens initially described the state’s action as “not a good, logical, well-thought-out design.”

While later softening his language, Stevens elaborated on the potential business consequences for companies like Circa.

Stevens emphasized that the fee structure will disproportionately affect sportsbooks that offer low-stakes options or operate with smaller profit margins.

He also cautioned that small-denomination bets, such as those of $1, $2, or $5, could become economically unviable.

Stevens suggested that the new tax system might compel sportsbooks to implement minimum wager requirements, perhaps set at $10, to maintain financial viability.

He further noted that after accounting for the federal excise tax and other licensing expenses associated with professional leagues, the new system leaves minimal profit margins.

A widespread concern is that this tax structure could drive bettors toward unregulated,offshore betting markets that do not incur such fees or offer consumer protections.

Jackson added in Flutter’s statement: “We also beleive the introduction of the Illinois Transaction Fee will likely motivate some Illinois-based customers to bet with unregulated operators. thes operators do not contribute tax revenue to the state, will not collect the newly announced transaction fee and do not offer the same levels of customer protection that regulated operators provide.”