Fanduel Imposes 50-Cent Fee Per Bet in Illinois Due to New Taxes

Fanduel, the largest online sports betting operator in the United States, has announced that it will begin charging customers an additional fee for their bets in the state of Illinois starting from September. This marks the first time the company has implemented such a fee globally. The fee, set at 50 cents per bet, is a direct response to a recent decision by the Illinois legislature to impose new taxes on sports betting. This move is expected to significantly impact major players in the industry, including Fanduel and DraftKings.

Flutter, the parent company of Fanduel, has stated that the fee will be immediately canceled if the state decides to revoke the new tax. Fanduel currently holds a 43% market share in the U.S. sports betting market. Last year, when Illinois increased the tax rate on betting companies, Flutter chose not to impose any additional fees on customers, while DraftKings initially announced plans to charge customers in high-tax states but later withdrew the proposal after receiving negative feedback.

Flutter's CEO, Peter Jackson, had previously suggested that the best way to manage higher tax rates, based on the company's experience in more mature European markets, is to reduce local marketing efforts or adjust customer incentives. This strategy was reported to offset about 50% of the increased tax burden in Illinois for 2024. However, Flutter has expressed disappointment with the new tax, stating that it will disproportionately affect large operators and potentially harm the overall market growth.

Jackson emphasized the importance of finding an optimal tax rate that allows operators to provide the best experience for customers, maximize market growth, and ultimately generate the most revenue for the state. The new tax in Illinois is expected to reduce Flutter's core profits by approximately 74 million dollars annually if no mitigating measures are taken. Despite this, Flutter anticipates a 35% increase in overall group profits for the year, reaching 3.18 billion dollars, with a significant portion of this growth coming from the rapidly expanding U.S. market.