DraftKings to Impose Transaction Fee in Illinois

DraftKings will implement a $0.50 transaction fee on all mobile and online sports wagers in Illinois starting September 1, making it the second major sportsbook operator after FanDuel to pass a new state-imposed surcharge directly to customers. The move is a direct response to Illinois’ revised budget, which introduces a per-wager tax aimed at increasing revenue from the booming sports betting market.

The fee reflects growing industry concerns over rising regulatory costs, particularly for dominant operators such as DraftKings and FanDuel, which together account for at least 75% of the state’s sports betting market share.

New Tax, New Charges

Under the state’s new fiscal plan approved on May 31, operators must now pay a $0.25 tax per wager on the first $20 million in monthly betting handle. Bets exceeding this amount are subject to a $0.50 tax per transaction. For top-tier platforms with high volumes, the effective burden is substantial — JMP Securities estimates that, if applied over the past year, DraftKings would have faced an added $79 million in gross taxes.

DraftKings CEO Jason Robins confirmed the new customer surcharge is a direct response to this structural change, stating the company was “disappointed” by the legislative direction.

“We’re very concerned about what this will do to the legal, regulated industry,” Robins said. “Illinois continues to fuel the rapidly growing illegal industry, which pays no taxes or fees and provides none of the consumer protections that regulated operators offer.” Robins emphasized that DraftKings would remove the transaction fee if the state reversed its policy.

Industry Pushback and Previous Attempts

This is not the first time DraftKings has attempted to offset rising taxes. In 2023, the company briefly floated a separate surcharge on player winnings in high-tax states, including Illinois. However, backlash from customers and competitors quickly derailed the plan. Analysts at Regulus Partners cautioned the move would “undermine credibility” and harm DraftKings' brand. Within an hour of FanDuel disavowing any similar measures, DraftKings scrapped the idea.

This time, however, the sequence is reversed. FanDuel, owned by Flutter, moved first, announcing its own $0.50 per-bet fee earlier this week. DraftKings' matching policy highlights a rare moment of coordinated pricing strategy between the two dominant operators in response to external regulatory pressure.

Consumer and Market Implications

While the transaction fee represents a marginal cost per bet, critics argue it may have broader implications. DraftKings' public warning about customer migration to unlicensed platforms underscores a long-standing industry concern: that excessive taxation can make the legal market less competitive, thereby incentivizing bettors to seek out offshore alternatives that operate without state oversight.

In a regulated context, these fees also resemble tactics from other sectors. DraftKings compared the move to surcharges in the airline or hospitality industries, where businesses itemize taxes and regulatory costs on consumer bills.

The latest surcharge follows a broader pattern in Illinois’ regulatory approach. Just one year earlier, lawmakers introduced a tiered tax model based on adjusted gross revenue (AGR). At the highest bracket — revenue over $200 million — operators now face a 40% tax rate. DraftKings and FanDuel are currently the only sportsbooks affected at this level.

 

We’re very concerned about what this will do to the legal, regulated industry. Illinois continues to fuel the rapidly growing illegal industry, which pays no taxes or fees and provides none of the consumer protections that regulated operators offer.

Outlook

With Illinois tightening its grip on the industry’s revenue streams, operators face tough decisions about how much of the burden to absorb and how much to shift to consumers. Whether these moves will lead to a decline in customer engagement, or accelerate the appeal of illegal markets, remains to be seen.

For now, DraftKings and FanDuel have drawn a clear line: the cost of doing business in Illinois will be increasingly visible to bettors — one 50-cent fee at a time.