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FanDuel, the US largest regulated sportsbook in terms of overall market share, appears to have found a work around to Illinois' marked tax increase from a 15% flat rate to a 20% to 40% graduated range.
They are imposing a 50 cent fee on all bets.
The fee “reflects the significant increase in the cost of operating in Illinois driven by the new Illinois Transaction Fee,” parent company Flutter said in its release. FanDuel’s fee begins July 1, same as the new tax.
“Should the state reverse its decision at any point in the future, FanDuel will immediately remove the $0.50 transaction fee,” the company said.
Flutter CEO Peter Jackson noted his disappointment in the fee, which he thinks will turn some bettors toward the black market.
“It is important to recognize that there is an optimal level for gaming tax rates that enables operators to provide the best experience for customers, maximize market growth and maximize revenue for states over time,” Jackson said. “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.
“We also believe the introduction of the Illinois Transaction Fee will likely motivate some Illinois-based customers to bet with unregulated operators. 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.”
Matt Miller, author of 'A Bettor Way of Thinking', balked at the notion of a 50 cent fee.
"Quite the opportunity missed for @FanDuel. I would have used this as an opportunity for some fun PR and offered to reward Illinois residents by paying the tax AND crediting accounts with the same amount as free bets.
"Sports bettors are notoriously terrible and long term losers. I would do absolutely nothing to get in the way of all the losing. I’d do whatever I could within regulatory and compliance guidelines to facilitate business, not inhibit it.
"As for the State of Illinois, nothing surprises me any more. This place is awful - my kids are the only reason I’m still here. Not sure this tax moves the bar any lower but also not sure the bar can move much lower."
For now, the 50 cent fee will only be imposed on residents of Illinois and, as noted above, will be removed should Illinois decide to abolish its planned tax hike. But remember those "temporary" airline baggage fees that were only supposed to offset rising fuel costs in 2008?
Only FanDuel and DraftKings took more than 20 million bets in Illinois last year.
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