Flutter sets transaction fee for FanDuel in Illinois after tax hike

Flutter Entertainment’s FanDuel Faces Elevated Sports Betting Tax Rates in Illinois

Flutter Entertainment has made headlines with its announcement regarding a new betting transaction fee for all sports wagers on its FanDuel platform in Illinois. This development comes in response to the state’s recent decision to implement a significant increase in sports betting taxes.

Effective September 1, FanDuel will introduce a $0.50 fee on all bets placed in Illinois. This fee directly correlates with the newly enacted tax legislation, designed to adjust the financial landscape for sports betting operators in the state.

The legislation passed by Illinois lawmakers stipulates that sports betting operators will incur a tax of $0.25 on each wager made up to the first $20 million in handle. Beyond this threshold, operators will face a $0.50 tax for every additional bet. This move represents a pioneering tax structure in the U.S. market.

In addition, a revised revenue-related tax has been implemented. As of last year, Illinois established a tax floor of 20% on adjusted gross revenue (AGR) from betting revenues, an increase from the previous flat rate of 15% for licensed operators. Notably, operators generating higher revenues, like FanDuel and DraftKings, now see a sliding scale where the tax rate can reach as high as 40% for those with annual AGR exceeding $200 million.

Although leading operators, including FanDuel, expressed their discontent regarding the previous increase, there were no substantial changes made to the user experience for players in Illinois. However, the recent tax alterations prompted Flutter to rethink its strategy, resulting in the new transaction fee.

Flutter Responds to ‘Significant’ Tax Increase

In defending its decision, Flutter stated that it made “extensive efforts” to absorb last year’s tax increase to safeguard its customers’ interests. Nevertheless, the company emphasized that the latest round of taxation necessitated a change in its fee structure.

Flutter has indicated that if the state of Illinois decides to retract its new tax measures, the $0.50 transaction fee applied to FanDuel users will be rescinded immediately.

Peter Jackson, CEO of Flutter, voiced a plea for Illinois to consider what he describes as an “optimal” framework for gaming rates, which he believes is critical to delivering a robust customer experience, while also enhancing market growth and state revenue.

“We are disappointed that the Illinois transaction fee will disproportionately impact casual bettors and punish those operators investing significantly to cultivate the online regulated market in the state,” Jackson stated.

Furthermore, Jackson raised concerns about the potential ramifications of the increased tax burden. He warned that the new fee could inadvertently drive customers toward unregulated operators, who operate outside the state’s tax framework.

“We also believe that the introduction of this fee may encourage some Illinois-based users to engage with unregulated platforms,” he explained. “These unauthorized operators do not contribute tax revenue to the state, bypass the newly imposed transaction fees, and fail to provide the customer protections afforded by regulated entities.”

As the gambling landscape continues to evolve, these developments in Illinois exemplify the complexities and repercussions of regulatory changes within the industry. Stakeholders must keep a keen eye on how such financial adjustments may impact customer behavior and the broader market dynamics, emphasizing the importance of an adaptive approach in this fast-paced environment.