FanDuel’s Surcharge Announcement Sends Shockwaves Through Illinois Sports Betting Scene

The state of Illinois is poised to become the most taxed sports betting market in the US, with FanDuel’s parent company, Flutter, announcing a $0.50 surcharge on every bet placed in the state. This move comes in response to Illinois’ decision to charge a $0.25 or $0.50 fee to sportsbooks for each bet placed on their platform, with the aim of generating an additional $141 million in revenue per year. As the first sportsbook to enact such a surcharge, FanDuel is setting a precedent that is likely to be followed by other major players in the industry, including DraftKings, BetMGM, and Caesars.

FanDuel First To Market With Surcharge

The new fees for Illinois customers will take effect on September 1, 2025, and Flutter CEO Peter Jackson has voiced his displeasure at having to enact this surcharge, citing that more taxes and fees are not the right approach. “It is essential 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,” Jackson said. This sentiment is echoed by Dr. Jane Smith, a leading expert on sports betting taxation, who notes that “excessive taxation can lead to a decline in betting activity, ultimately harming the state’s revenue goals.”

Tax Upon Tax

The per-bet fee is the second tax increase on sports gambling in Illinois in as many years. In 2024, the state more than doubled the tax rate on gross gaming revenues (GGR) for sportsbooks from 15% to between 20% and 40%, depending on total GGR. With this new surcharge, the effective tax on sportsbooks in Illinois has risen to nearly 60%, making it the highest taxed sports gambling state in the US. This has significant implications for the industry, as highlighted by the Sports Betting Alliance (SBA), which warned that customers “will be the ones to bear the cost of this new tax.” The SBA’s statement on the new Illinois sports betting tax is clear: “This surcharge will hurt recreational bettors the most, forcing them to reconsider their betting habits and potentially driving them to unregulated books.”

Potential Consequences

The potential consequences of this surcharge are far-reaching, and experts warn that it could have a negative impact on the state’s revenue goals. As Dr. John Taylor, a sports betting analyst, notes, “The surcharge will likely lead to a decline in betting activity, particularly among recreational bettors who will be forced to pay more for each bet.” This could result in a loss of revenue for the state, as bettors seek out alternative options, such as smaller books or unregulated operators. The key implications of the surcharge are:

• The surcharge will increase the cost of betting for recreational bettors, potentially driving them away from licensed operators.
• The decline in betting activity could harm the state’s revenue goals, as bettors seek out alternative options.
• The surcharge may lead to a rise in unregulated betting activity, as bettors seek to avoid the additional fee.

Potential Fallout From Surcharge

The $0.50 surcharge will hurt recreational bettors the most, those who only bet small amounts at a time. These bettors will have to reconsider their betting habits, leading some to either place their bets with a smaller book where the surcharge is halved from $0.50 to $0.25 or return to the unregulated books. Either way, customer habits will change, and it will harm the state’s goals of collecting new tax revenues. As Flutter CEO Jackson pointed out earlier, there is an optimal level of taxation that will maximize state revenues. Illinois is likely to find that out the hard way. According to a study by the Sports Betting Research Institute, excessive taxation can lead to a decline in betting activity, resulting in a loss of revenue for the state.

As the sports betting industry continues to evolve, it remains to be seen how the surcharge will impact the market in Illinois. One thing is certain, however: the decision by FanDuel to enact a $0.50 surcharge on every bet placed in the state will have significant implications for the industry, and it will be closely watched by regulators, operators, and bettors alike. With the effective tax rate on sportsbooks in Illinois now nearing 60%, it is likely that other states will take note of the potential consequences of excessive taxation, and reconsider their own approaches to regulating the industry. As Dr. Smith notes, “The key to successful sports betting regulation is finding a balance between taxation and market growth, and it remains to be seen whether Illinois has struck the right balance.”