Flutter plans $0.50 transaction fee impacting FanDuel customers in Illinois due to new tax hike

Flutter Entertainment has announced a new betting transaction fee on all sports wagers with FanDuel in Illinois following the state’s decision to increase the tax on sports betting.

From 1 September, Flutter’s FanDuel brand will introduce a $0.50 fee on all bets placed on its platform in Illinois. The group said this is in direct response to the recent tax hike.

Legislation approved by lawmakers stated Illinois sports betting operators will pay a tax of $0.25 on each of their fiscal year wagers up to the first $20 million in handle. From here, operators will face a $0.50 tax for each bet above the $20 million threshold. It is the first tax of its kind in the US.

This would be on top of revenue-related tax, which was also recently changed. Last year, the state set a new tax floor of 20% of betting adjusted gross revenue (AGR). This was up from the former flat rate of 15% for all licensed operators.

However, the state also established a sliding scale that has increased the tax rate for operators generating the highest revenue in Illinois, such as FanDuel and DraftKings. This tops out at 40% for operators generating annual AGR of at least $200 million.

Major operators such as FanDuel voiced their opposition to the previous increase but did not amend player experience in Illinois. However, the latest tax change has led Flutter to switch things up with the new transaction fee

Flutter blasts ‘significant’ tax increase

Detailing its decision, Flutter said it made “extensive efforts” to absorb last year’s initial tax increase so it would not impact customers. However, it said the new, additional tax meant it had to take action.

Flutter did add, however, if Illinois reverses its decision, it would immediately remove the $0.50 transaction fee imposed on FanDuel customers.

Commenting on the issue, Flutter CEO Peter Jackson said Illinois should recognise there is an “optimal” level for gaming rates. He said this enables operators to provide positive customer experience, as well as maximise market growth and revenue for states.

“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,” Jackson said.

Jackson also warned of possible related consequences of the tax rise. He suggested the new fee on FanDuel could push some customers to unregulated operators that are active in Illinois but not subject to tax rules like approved platforms.

“We also believe the introduction of the fee will likely motivate some Illinois-based customers to bet with unregulated operators,” he said. “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.”