Illinois lawmakers passed a new tax on sports betting in the state budget, which places a $0.25 tax on every bet placed at a sportsbook, with operators that accept over 20 million wagers charged a higher tax of $0.50 per bet.
Fanatics Adds Tax On Illinois Bets, Following Moves By DraftKings And FanDuel that they would pass the whole cost directly onto users and put a $0.50 surcharge on all bets in Illinois.Fanatics are estimated to hold roughly 10% of the market in Illinois, so they would be on the edge of the 20 million bet threshold. An initial fee of $0.25 may then be introduced, which could possibly rise depending on the volume of bets the sportsbook accepts.
Sports Betting Alliance Heavily Critical Of New Tax
The Sports Betting Alliance (SBA), of which Fanatics, FanDuel, and DraftKings are all members, has been heavily critical of most tax increases, but was particularly outspoken in its condemnation of Illinois’s unprecedented tax on every bet.
The group posted a statement on its website, commenting, “For the second consecutive year, the Illinois legislature chose to balance its budget with a crippling tax on legal online sports betting operators and their million plus Illinois customers — this time with no warning and no consideration of the devastating impact this tax would have on the legal market.”
Fanatics Adds Tax On Illinois Bets, Following Moves By DraftKings And FanDuel companies last year, raising the tax on revenue from 20% to between 36 and 40% depending on the size of the operator.The statement continued, “Make no mistake, this discriminatory, punitive and constitutionally suspect tax increase on legal sportsbooks who have invested more than a billion dollars in the state will be destabilizing for regulated sports betting in Illinois.”
In particular, the new tax will inhibit small stake betting. Any bettors looking to place bets of around $1 will likely be put off by the surcharges implemented by FanDuel, DraftKings, and now Fanatics.
Other members of the SBA, BetMGM and bet365, who joined the group last month, have yet to make any announcement on their plans for bets placed in the state.
Fanatics Adds Tax On Illinois Bets, Following Moves By DraftKings And FanDuelBetting Surcharges Will Send Users Offshore, Says SBA
With 3 of the 5 members announcing that users will front the costs of the new tax, the SBA states that it believes users will turn to unregulated, offshore betting sites.
The SBA statement said, “With this change, lawmakers are essentially urging customers – and especially these small dollar bettors – to switch to unsafe and unregulated sportsbooks who defy state consumer protections and generate zero taxes for state priorities. These illegal operators are the big winners.”
Last year, unregulated sportsbooks were estimated to have generated around $900 million in revenue in Illinois, just short of the $1.2 billion generated by regulated betting companies.
Online Casinos Can Generate More State Revenue
Rather than charging licensed operators more for sports betting, the SBA wants the state to collect more tax revenue by legalizing Illinois online casinos.
The Internet Gaming Act was introduced by lawmakers earlier this year through bills in the Senate and the House. The legislation proposes to legalize online casinos in the state with a tax rate of 25%. Current gaming license holders would be allowed to operate up to three branded online casino “skins” each.
Fanatics Adds Tax On Illinois Bets, Following Moves By DraftKings And FanDuel Fanatics Adds Tax On Illinois Bets, Following Moves By DraftKings And FanDuelLast year, unregulated online casinos are estimated to have generated over $3 billion in revenue in Illinois, so legalization could see a big return in tax revenue.
The SBA concluded its statement writing, “This is not the end of this conversation. We will continue to fight this discriminatory tax alongside our customers – both right now in Illinois and in any state that considers these harmful tax changes in the future.”
FanDuel and DraftKings indicated they would immediately withdraw the betting surcharge if Illinois lawmakers remove the new tax, and we would expect Fanatics would do the same.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
