DraftKings implements 50-cent transaction fee to offset Illinois betting tax

Following on the heels of a similar action by Flutter Entertainment (FLUT), DraftKings (NASDAQ:DKNG) will implement a 50-cent transaction fee on all mobile and online bets placed in Illinois to offset a tax increase on sports wagering enacted by the state’s legislature.

The transaction fee will go into effect on September 1.

“We are disappointed that Illinois policymakers have chosen to more than triple our tax rate over the past two years, and we are very concerned about what this will do to the legal, regulated industry. Meanwhile, 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,” DraftKings CEO Jason Robins said in a statement.

Earlier this week, FanDuel responded to the higher tax with a similar 50-cent transaction fee to offset the “significant increase in the cost of operating in Illinois.”

On May 31, Illinois lawmakers passed a new $55.2B state budget which contains a provision for a 25-cent per bet fee for the first 20 million bets a company takes, and 50-cents after that. In response, the Sports Betting Alliance called the new fees “discriminatory” and said users will likely bear the cost.

Detractors of the Illinois betting tax — the second-highest in the country after New York — also believe it will result in worse betting odds and fewer promotions for customers, ultimately driving players to black market casinos and online betting platforms.