Illinois Operators React to Tax Hikes with Minimum Sport Betting Wagers

BetMGM and Hard Rock Bet are the latest operators in Illinois to introduce new minimum wager requirements, a move prompted by the state’s recent increase in sports betting taxes. Other operators, meanwhile, are passing the financial burden of the raised taxes to consumers via surcharges.

Hard Rock Bet and BetMGM Impose Minimum Sports Betting in Illinois

Hard Rock Bet now mandates a minimum sports wager of $2 in Illinois, while BetMGM has set its minimum slightly higher at $2.50. Hard Rock was the first of the two operators to introduce the minimum bet policy, with BetMGM notifying customers of its new requirement earlier this week.

These changes come in response to Illinois implementing a second online sports betting tax within a year. The new tax imposes a fee of 25 cents per wager on an operator’s first 20 million bets, which then doubles to 50 cents per bet for any wagers beyond that threshold. Illinois legalized sports betting in 2020, and going into 2024, the state imposed a 15% tax on operators. Last year, that shifted to a tiered system ranging from 20% to 40%, and now sportsbooks face an additional per-bet tax of either 25 or 50 cents per wager.

Other Operators Decide on Surcharging

Some major operators are now passing Illinois’ new betting tax directly onto customers through surcharges. FanDuel was the first to act, announcing a 50 cent surcharge on all bets starting September 1. The company pointed out that this marks the second tax increase within a year. In 2024, FanDuel’s tax rate on gross gaming revenue jumped from 15% to 40%, a cost it says it absorbed at the time. However, the operator now argues it must shift some of the burden to consumers in order to protect its margins.

FanDuel’s move sent ripples through the industry, with analysts and investors closely monitoring the reaction. Following the relatively positive response, DraftKings quickly followed suit, also introducing a 50 cent surcharge. Unlike last year, when DraftKings faced backlash and ultimately walked back a similar fee, the company this time strategically timed its announcement to align with broader industry shifts.

It should also be noted that Fanatics has also imposed a similar surcharge to offset the losses due to the Illinois tax raise. However, unlike DraftKings and FanDuel, Fanatics opted for a lower surcharge, choosing to impose a 25 cents fee per bet instead of the 50 cent charged by its competitors.

While the state’s new sports betting tax might be seen as a hindrance for the wider betting industry in Illinois, there has also been quite a lot of positive development in the jurisdiction as well. For example, recently, the Attorney General of Illinois has said that the state is weighing the possibility of legalizing real money use in online casinos. Proponents argue that legalizing gambling amid a surge in interest is a win for the state.