More Fallout From Illinois per-Bet Tax as BetMGM and Hard Rock Impose Minimum Wagers

Beginning in July, Illinois implemented a per-bet fee on all sports betting platform providers in the state. Some have chosen to pass this cost on to their customers, while others, such as BetMGM and Hard Rock Bet, have increased minimum bets to offset the impact on their bottom lines.

Pay to Play

Last year, the Illinois legislature increased taxes on sportsbooks from 15% to as high as 40% using a tiered system. The more revenue generated, the more must be shared with the state, which politicians believe will level the playing field. However, industry insiders contend that the more dominant sportsbooks are being penalized for their success.

Nevertheless, this session, the legislature took another bite at the apple. Instead of raising taxes on sportsbooks’ profits even more, they decided to implement a per-bet fee of 25 cents per wager for the first 20 million bets and 50 cents per bet for anything more than 20 million wagers. Yet again, the more popular sportsbooks are being penalized for their success, but every sportsbook will feel the pinch, and some have decided to fight back.

Operators Respond With User Fees

There’s nothing like the perception of excessive or unjust taxes to get people and corporations to act, which is precisely what FanDuel did by announcing its 50-cent-per-bet rule following the legislature’s announcement. DraftKings followed suit shortly thereafter, with Fanatics announcing a 25-cent per bet fee to its patrons.

Yet, now we are seeing some of the mid-tier sportsbooks taking action. BetMGM announced it was imposing a $2.50 minimum bet, while Hard Rock Bet has also implemented a $2.00 minimum wager in response to the most recent per-bet fee amendment.

SBA Pushes Back

The Sports Betting Alliance, comprised of FanDuel, DraftKings, BetMGM, and Fanatics, released the following statement:

“For the second consecutive year, the Illinois legislature chose to balance its budget with a crippling tax on legal online sports betting operators and their million-plus Illinois customers — this time with no warning and no consideration of the devastating impact this tax would have on the legal market.”

iGaming Coming to Illinois?

The legislature is considering legalizing online casino gambling, according to Illinois Attorney General Kwame Raoul, who spoke last month at the National Council of Legislators from Gaming States. He believes the state will, at some point, adopt iGaming legislation as a means of bridging budget deficits in the state.

State Rep. Edgar Gonzalez proposed iGaming legislation through House Bill 3080 and stated, “If we had something like iGaming, we would have still had a financial fallback in spite of gross negligence by the first Trump administration,” he said Wednesday at a Capitol hearing on his proposal to legalize internet gambling. “Illinois is gambling with its financial future by delaying the adoption of iGaming.”

James Hartmann, a lobbyist for mobile sportsbook FanDuel, testified as well and said, “Whether or not you choose to pass legislation legalizing iGaming, it is already here. Right now, you can take out your phone and, in five minutes, be gambling real money on slot machines from the app store, unregulated and untaxed.”

As of this writing, Illinois is without online casino gambling, but many believe it will be adopted sooner rather than later.