Flutter to charge $0.50 on bets in Illinois to offset state’s transaction fee

Flutter Entertainment will introduce a $0.50 charge on all bets placed in Illinois to offset the new transaction fee soon to be applied to every bet struck in the Prairie State.

The new fee, which was included in the state’s budget approved in May, will see a $0.25 charge on the first 20 million sports wagers accepted in Illinois each year.

The fee then rises to $0.50 on all bets placed thereafter, with the move expected to generate around $36m annually for the state’s coffers.

The new charge will come into effect from 1 July, with Flutter planning to add the $0.50 fee on all bets from September 1 for its FanDuel brand.

The operator said the $0.50 would cover the “significant increase in the cost of operating in Illinois.”

The company noted that should the new tax, which it labelled as the “Illinois Transaction Fee”, be revoked, it would immediately drop the fee.

Flutter added that the introduction of the Illinois Transaction Fee comes after the firm had to absorb the costs of the previous tax hike that was implemented in the state last summer.

In July 2024, Illinois switched from a flat 15% GGR tax rate to a graduated system of 20% to 40%, based on how much revenue an operator generates each year.

FanDuel and DraftKings are the only two operators to be caught in the upper 40% bracket.

Flutter said: “The introduction of this fee by the state follows a substantial increase in the betting tax rate in Illinois in 2024.

“Following the 2024 increase, extensive efforts were made by FanDuel to absorb the cost fully without impacting customers.”

DraftKings unveiled plans to place a gaming tax surcharge on customers in states with tax rates north of 20% in August last year, including Illinois and New York, to offset the rising costs.

However, the Boston-based firm performed a U-turn after less than two weeks, citing negative customer feedback. At the time, Flutter and other US-facing firms did not follow DraftKings’ lead in putting a fee in place.

DraftKings had planned for a “low- to mid-single digit percentage” being taken from winnings to offset the more burdensome taxes.

With Q2 earnings season around the corner, it is yet to be seen if Flutter’s fellow listed gambling operators will follow suit by charging a fee in Illinois.

Peter Jackson, Flutter CEO, admitted he was “disappointed” to be implementing the charge and that the state’s new transaction fee could well see Illinois residents flock to black market operators.

He said: “It is important to recognise 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.

“We are disappointed that the Illinois Transaction Fee will disproportionately impact lower wagering recreational customers while also punishing those operators who have invested the most to grow the online regulated market in the state.

“We also believe the introduction of the Illinois Transaction 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.”