DraftKings Becomes Second Sportsbook to Add Illinois Fee

Things got more expensive for sports bettors in Illinois.

DraftKings Sportsbook has announced that it will add a new $0.50 surcharge on all wagers placed in the state. The new fee matches the one announced by FanDuel days earlier, which joins DraftKings in owning the vast majority of the Illinois market share. The industry leaders will begin assessing the fee on September 1. 

The decision by DraftKings is in response to a new “per bet” tax that was recently approved as part of the Illinois state budget. It requires operators to pay a $0.25 tax on each wager placed for the first 20 million accepted. If more than 20 million bets are accepted, the rate jumps up to $0.50.

While the new tax may seem small, operators believe it will have a significant impact on their revenue. The Sports Betting Alliance, whose members include DraftKings and FanDuel, ripped Illinois lawmakers soon after the budget was approved. 

The group pointed out that the state raised its tax rate just a year earlier, switching to a tiered system. This sets tax rates for each operator based on their overall revenue, with larger operators being charged far more than their small rivals. As a result, DraftKings saw its tax rate jump from 15% to 40%.

DraftKings confirmed that it would repeal the surcharge if the new “per bet” tax is dropped.

Will Other Sportsbooks Follow?

FanDuel and DraftKings were expected to be the first sportsbooks to take action against the tax. The duo was already subjected to massive tax hikes and tried to fight them, but were ultimately forced to accept them. That was an enormous win for Illinois lawmakers, but it appears the operators have now been pushed to their limit.

Now the question is which sportsbooks will add surcharges of their own. While the SBA presents a united front, several operators are struggling under the dominance of FanDuel and DraftKings. This could lead them to split from industry leaders in an attempt to win over their customers with lower betting costs.

The one we’re watching closely is ESPN Bet, which seems to be on the brink of failure for parent company Penn Entertainment. Leadership is under fire to shutter the platform, but is hoping for one last push to become profitable. This could be all the motivation they need to defy the SBA in a last-ditch effort for survival.