FanDuel Drops Per-Wager Fee as Illinois Mulls Tax Changes

It seems the tensions between operators and lawmakers in the Land of Lincoln.

FanDuel Sportsbook announced it is officially hitting pause on its $0.50 per-wager fee in Illinois’ sports betting market. The fee was originally added to help the industry leader offset costs from the state’s controversial per-wager tax, which it enacted on July 1. 

Lawmakers in the House are currently reviewing HB 5143, which would repeal the source of tension between the state and the sports betting industry.

“Amends the Sports Wagering Act,” the Illinois House proposal reads. “Provides that the tax imposed on each master sports licensee for each wager placed with the master sports licensee for sports wagering over the Internet or through a mobile application shall end on July 1, 2026. Effective immediately.

The bill had some momentum as it easily moved through the Rules Committee. However, the Revenue & Finance Committee re-referred it back to them on March 27, where it remains.

There is some hope that FanDuel’s decision to end its per-wager fee is a sign that HB 5143 will once again start moving towards a House floor vote. While this would be an excellent first step towards rebuilding the trust between the two sides, lawmakers may want to see similar scaledowns from the other nine mobile sportsbooks in Illinois.

According to Yahoo Finance, the state has generated over $32 million in revenue from the hotly contested tax.

Does FanDuel See the Writing on the Wall?

When sports betting began to spread across US markets, the industry seemed to hold all the cards when negotiating with states. The massive tax revenue it generates has helped several states create operator-friendly regulations that address operating costs. While some states tried to raise their tax rates, the industry consistently defeated those efforts. 

That has been changing over the last two years as lawmakers better understand the leverage they have. We saw that from Illinois state lawmakers, as well as those in Cook County and Chicago, who added taxes of their own. 

FanDuel hoped its new prediction platform would help shift the balance back in its favor, but the new industry’s future seems far less certain. A growing bipartisan effort shows the industry is unpopular with both parties, and its support from the White House could be in trouble as the administration’s popularity continues to sink.

It appears these factors have resonated with FanDuel’s leadership, leading them to take the first step towards repairing relations in Illinois.