Flutter Entertainment has declared the implementation of a new betting transaction fee for FanDuel users in Illinois, following the state’s recent tax increase on sports betting. Effective September 1, a fee of $0.50 will be levied on all bets made through the platform in Illinois. This move comes as a direct response to the state's legislative changes.
The recently enacted law requires Illinois sports betting operators to pay a tax of $0.25 on every wager for the first $20 million in handle during the fiscal year. For bets beyond that threshold, the tax rate escalates to $0.50 per wager, marking the first of its kind in the United States.
Additionally, there has been a change in the revenue-related tax structure. Last year, Illinois instituted a minimum tax rate of 20% on adjusted gross revenue (AGR) from betting, increasing it from a flat rate of 15% previously imposed on licensed operators. Furthermore, a sliding scale was established, which has raised taxes for operators like FanDuel and DraftKings that generate higher revenues. This tax can reach as high as 40% for operators with an annual AGR of $200 million or more.
While major operators such as FanDuel expressed opposition to previous tax increases, they did not change customer experience in Illinois. The recent tax change, however, necessitated Flutter’s introduction of the new transaction fee.
In justifying the fee, Flutter stated they made extensive efforts to absorb last year’s tax hike without affecting customers. However, the new tax compelled them to adjust. They also indicated that if Illinois were to reverse this decision, the $0.50 transaction fee would be abolished.
Regarding this issue, Flutter CEO Peter Jackson mentioned that Illinois should recognize an optimal gaming tax rate that supports positive customer experiences while maximizing market growth and state revenue. Jackson expressed disappointment that the new fee would disproportionately affect lower wagering recreational customers and penalize operators who have significantly contributed to the regulated online market in the state.
He also voiced concerns that the increased tax could drive some customers toward unregulated operators, who do not adhere to the same tax regulations and customer protections. Jackson warned, "We also believe the introduction of the fee will likely motivate some Illinois-based customers to bet with unregulated operators. These 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."
