FanDuel announced Tuesday that it will offset the new per-bet sports betting tax from the state of Illinois with a 50-cent fee on each bet.
The fee “reflects the significant increase in the cost of operating in Illinois driven by the new Illinois Transaction Fee,” parent company Flutter said in its release. FanDuel’s fee begins Sept. 1 while the tax starts July 1.
FanDuel already took “extensive efforts” to absorb the full cost of last year’s tax increase, which bumped sports betting taxes from a 15% flat rate to a graduated 20% to 40% range, without impacting customers. Illinois’ new per-bet tax adds 25 cents to each wager up to 20 million annual bets, jumping to 50 cents per bet after 20 million.
Only FanDuel and DraftKings took more than 20 million bets in Illinois last year.
“Should the state reverse its decision at any point in the future, FanDuel will immediately
remove the $0.50 transaction fee,” the company said.
DraftKings ‘anticipates taking action’
FanDuel may not be on an island for long.
Last August, DraftKings announced it would add a gaming surcharge to all bets placed in four states with tax rates higher than 20%. The company eventually dropped the idea weeks later after no other operators, including FanDuel, bought into the idea.
Now, with DraftKings’ biggest competitor on board with a fee to offset the new tax, the company could now come back to its idea.
“In response to the recent and prior mobile sports wagering tax increases in Illinois, DraftKings anticipates taking action and expects to share more information soon,” a spokesperson told LSR Tuesday.
An example given by DraftKings last year showed how a $10 bet at +100 for a payout of $20 would be impacted by the surcharge. The slip showed the bettor being charged $0.32 for a total payout of $19.68, or 1.6% of the payout.
FanDuel: fee punishes those who invested most
Flutter CEO Peter Jackson noted his disappointment in the fee, which he thinks will turn some bettors toward the black market.
“It is important to recognize 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,” Jackson said. “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.”
