Tomorrow marks the start of the National Football League season. And, just in time, online sports betting companies for the first time are imposing per-bet fees on Illinoisans as the companies seek to pass along new taxes imposed by Democrats in Springfield.
Bettors predictably are angry as they're getting notices from the likes of DraftKings and FanDuel of per-bet fees of 25 cents or 50 cents effective Sept. 1. Here's the rub, though. Some of the companies, virtually all of which are passing the new taxes along to bettors in some form, aren't charging all of their customers.
Like rational businesses do, they're seeking to recover expenses from customers who don't make them much money -- or even are loss leaders -- while shielding those customers who make them lots of money. In the gambling business, the folks who generate the profits for the house are -- not to put too fine a point on it -- the losers. The people who bet a lot -- and lose more than they win -- are how the companies stay in business.
So how these sports gambling firms are behaving in response to these new state taxes is hardly surprising. In fact, the outcome is precisely what the industry predicted when lawmakers voted for the per-bet taxes earlier this year in order to raise $36 million to help plug a budget deficit in the hundreds of millions. The law imposes a 25-cent tax on each online sports bet, rising to 50 cents once a sportsbook passes 20 million wagers in a fiscal year.
The new tax came after Springfield in 2024 dramatically increased the state's levy on gambling sites' Illinois revenues, to as much as 40% from 15% previously.
That 2024 law induced the companies to decrease the odds of winning, which negatively affected bettors in the aggregate, albeit not in so direct a way that the casual gambler would notice. But the 2025 tax does something far more pernicious -- it effectively penalizes casual gamblers who lay down $5 to $10 on a game (or less) and incentivizes them to bet more than they can afford to put at risk.
After all, a 50-cent fee on a $5 bet is a whopping 10% tax. If you're betting, say, $50, 50 cents won't mean all that much -- the charge is just 1%.
In at least one example, a high-profile industry name is proactively encouraging larger bets.
DraftKings, one of the biggest online sports gambling sites in Illinois, is slapping 50- or 25-cent fees on most bets. But wagers of $50 or more on single events will be spared the fee. And bets of $10 or more on higher-risk parlays -- gambling that two or more specific things will happen -- also will be free of the charge.
Many of the companies operating in Illinois aren't charging the fees for bonus bets they routinely offer customers to induce them to wager more frequently. Other sites are boosting their minimum bets, so those who like to bet a buck or two on a game increasingly will find it difficult to do so.
Judging by the angry reaction on social media, Illinois politicos may well ultimately conclude the $36 million in annual revenue (or whatever the haul turns out to be depending on how many bettors turn to out-of-state platforms) wasn't worth the backlash. Lots of young men are into sports betting and are taking notice.
For Gov. JB Pritzker, who has national political aspirations, signing the nation's only per-bet tax into law won't appeal to young men. That demographic proved to be a surprisingly big factor in Donald Trump's 2024 victory.
Beyond the political calculations, sports betting is proving to be such an addictive practice that it's trapping more people in unmanageable credit card debt, dinging their credit ratings or even forcing bankruptcy filings. The worst part of this tax is that Illinois Democrats, in their desperation for more revenue, ended up encouraging more casual bettors to overdo it and get into financial trouble.