Three major sportsbook operators—FanDuel, DraftKings, and Fanatics—have chosen to shift the financial burden of Illinois’ new per-wager tax to their users by tacking on new transaction fees to every bet. But now, the Illinois Gaming Board (IGB) is signaling that these fees themselves may also be taxable income, adding a new layer of financial complexity.
State Clarifies Tax Obligations for Operators
In a June 17 memo to licensed sportsbooks, the IGB issued guidance regarding the state’s new tax structure. The agency confirmed that the per-wager tax, which can reach up to 50 cents per bet, applies to all bets—regardless of the outcome, payout, or whether bonus funds or credits were used. Exceptions were made for canceled or voided bets, but nearly all others fall under the taxable umbrella.
After FanDuel and DraftKings publicly announced their intent to impose a 50-cent fee on Illinois bets and Fanatics followed with its own 25-cent surcharge, the IGB followed up on July 10 with further clarification. The board stated that although operators are allowed to impose such charges, they must report any income derived from them as part of their gross receipts.
“These fields should be used for any additional revenue received in relation to the conduct of sports wagering,” the IGB informed operators, noting that subscription services like DraftKings Sportsbook+ would also count. This updated reporting system will take effect with the July 2025 tax period, which is due at the end of August. However, the transaction fees themselves are not expected to be implemented until September 1.
FanDuel and DraftKings Uncertain About Tax Implications
FanDuel’s parent company, Flutter, indicated on a recent earnings call that it is not budgeting for the transaction fees to be taxable income. CFO Rob Coldrake explained that the company’s Illinois tax burden, estimated at $35 million, is expected to be reduced to $5 million due to the offset provided by the per-wager fees.
“If there are some changes around the way the fee is perceived by the state, then we’ll address that accordingly,” Coldrake stated, while adding that the company is keeping a close watch on developments.
DraftKings CEO Jason Robins shared a similar sentiment, acknowledging during his earnings call that the issue remains murky. “Our position is this was a pass-through and it shouldn’t be taxed,” he said. “I think Illinois has taken a little bit of a different view on it, so we’re going to try to obviously resolve that before we implement the charge.”
Should the IGB move forward with taxing the fees, Robins indicated the company might abandon the surcharge model altogether and instead adjust betting odds to recoup losses another way. “If it ends up being treated as taxable revenue, then there’s really no benefit to do that [per-wager fee] versus incorporating into the pricing,” he said.
Some Operators Opt for Alternatives
Unlike FanDuel, DraftKings, and Fanatics, other operators like BetMGM and BetRivers have opted for a different strategy. Rather than applying a surcharge to every bet, these companies have increased minimum bet requirements, thereby sidestepping the potential for their revenue adjustments to be taxed as pass-through fees.
Source:
“Illinois regulators sent operators instructions to tax customer surchages”, sbcamericas.com, Aug 11, 2025
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