Illinois Approves Per-Wager Tax, Industry Reacts Swiftly

Illinois has ed a controversial new tax on online sports betting, rattling the industry and sending major sportsbook stocks into decline. The move, part of a newly approved $55 billion budget, imposes a 25-cent tax on each of the first 20 million bets placed per year by a licensed sportsbook—doubling to 50 cents for each bet beyond that threshold.

Gov. J.B. Pritzker is expected to sign the bill, which forms part of a broader $800 million tax package aimed at boosting state revenue. The last-minute change triggered a sharp selloff among gambling stocks: DraftKings fell 6%, Flutter Entertainment (FanDuel’s parent company) slid more than 2%, and the Roundhill Sports Betting & iGaming ETF (BETZ) lost over 1%.

FanDuel, DraftKings Bear the Brunt

Analysts say the per-bet model will hit high-volume operators hardest. “DraftKings and Flutter’s FanDuel should both ‘certainly’ sur 20 million wagers,” said Truist analyst Barry Jonas, meaning much of their business will fall under the steeper tax. Smaller platforms like BetMGM, Fanatics, and Penn’s ESPN Bet will see more moderate effects.

According to Legal Sports Report, the new tax could have added $159 million to last year’s $276 million in sportsbook taxes. FanDuel would have contributed $74 million under the new structure; DraftKings, $67.9 million.

Industry Calls Tax ‘Punitive’ and ‘Unfair’

The Sports Betting Alliance (SBA)—representing FanDuel, DraftKings, BetMGM, and Fanatics—called the tax “discriminatory, punitive and constitutionally suspect.” The group emphasized the burden on casual bettors, noting that even $1 wagers could now carry a 25% or 50% tax rate.

“Customers understand that they will be the ones to bear the cost of this new tax,” the SBA said. The group also warned the move could drive bettors toward illegal, unregulated sportsbooks that don’t pay state taxes or offer consumer protections.

Industry voices like Robert Walker of ARMS and tax policy expert Adam Hoffer echoed the concern. “This feels like short-sighted revenue grabbing,”Walker said, warning sportsbooks may raise minimum bet requirements. Hoffer said the fixed per-bet model could distort the market and make it harder for small wagers to survive.

Other States May Follow Illinois ‘ Lead

This is Illinois’ second consecutive year targeting sports betting with new taxes. In 2023, the state shifted from a flat 15% tax to a progressive model ranging from 20% to 40%, depending on revenue. With Saturday’s vote, Illinois became the first state to adopt a fixed per-wager tax, and analysts fear it won’t be the last.

“Other states could look to copy [Illinois],” Truist analysts noted. Maryland recently increased its sports betting tax, and Ohio had considered a new handle tax before dropping the proposal.

The SBA warned that lawmakers should consider legalizing online casinos, which could generate up to $800 million annually, rather than overtaxing sports betting operators.

Source:

“Sports betting stocks slide after Illinois lawmakers approve tax hike” cnbc.com, Jun 2, 2025