Impacts of new Illinois sports betting taxes on bettors

Key Points:

• Illinois passed a per-bet tax for operators on sports wagers: $0.25 for the first 20M bets, $0.50 thereafter. The final step in the legislative process is a signature from Governor JB Pritzker.

• Smaller, recreational bettors may suffer disproportionately due to flat fees.

• The tax structure could push some bettors to unregulated, riskier offshore platforms

• Some may increase wager size or frequency to "justify" the tax, risking faster losses.

• Public outcry was swift and large, but ultimately ineffective in halting the measure.

• Illinois gambling addiction treatment funding remains limited despite tax hikes

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On June 1, 2025, Illinois quietly passed a sweeping change to its sports betting tax structure in the late hours of the night, triggering concern and confusion among sportsbook operators and bettors alike. The newly enacted per-wager tax, which is set to go into effect on July 1 after an expected budget sign-off from Governor JB Pritzker, will levy $0.25 on the first 20 million bets accepted by a sportsbook in the fiscal year, followed by $0.50 per bet thereafter.

Illinois bettors, particularly those placing smaller or more frequent bets, could bear the brunt of the ripple effects of this tax, but not all of them will be obvious.

Potential impacts of new taxes on Illinois bettors

Illinois previously transitioned from a flat 15% tax on sportsbooks’ adjusted gross revenue to a progressive model ranging from 20% to 40%, depending on operator size. That change, while controversial, didn’t garner nearly this level of outcry and pushback.

The new per-bet surcharge, however, is a first of its kind that sets Illinois apart from every other regulated market in the country. The flat-fee structure means smaller bets become disproportionately more expensive for both bettors and operators.

In the words of Adam Hoffer of the Tax Foundation, "It's going to distort the market, which is not something you generally want tax policy to do."

Taxes alone obviously don’t cause gambling addiction, but they have the potential to shift behaviors in ways that escalate harm: higher average bet sizes in an attempt to offset flat fees, faster progression of losses especially among lower-income bettors, reduced transparency and trust in regulated betting systems and potential shifts to riskier, offshore gambling behavior.

Let’s discuss some of these potential impacts more in depth.

Bettor migration to unregulated platforms 

The Sports Betting Alliance (SBA) – a coalition of most of the top gambling operators in the country – was immediately vocal about the risk of consumer migration to illegal sportsbooks. These platforms do not adhere to state-mandated responsible gambling policies and contribute $0 in gaming tax revenue to Illinois programs. Worse, they do not offer:

• Guaranteed payout protections
  
  

• Regulatory oversight or dispute resolution
  
  

• Industry-standard systems to minimize risks of fraud or identity theft

These issues make them especially dangerous for individuals with gambling problems, as there is little to no safety net once harm begins.

Potential increased wager sizes due to flat per-bet tax

For many casual sports bettors, like those placing $1 or $2 wagers (oftentimes parlays) for fun, the new tax structure may create an outsized impact. As the SBA argues, “a per bet tax most penalizes small recreational bettors.”

The math backs that up. If a bettor places a $1 wager, a $0.50 surcharge represents a 50% tax rate on the bet itself, which is an almost absurd burden relative to the bet's size. This assumes that sportsbooks will pass the taxes on to its bettors, but that is a somewhat safe assumption given historical precedent. (There are other ways they could pass along the tax impact more discretely though, including less favorable odds, such as -125 lines instead of -110, for example).

This shift might drive bettors to increase wager amounts to make the tax feel more “worth it,” a behavior that can accelerate financial loss and risky gambling patterns. 

UPDATE - June 10, 2025:

In a move that was not unexpected, FanDuel’s parent company Flutter announced that every bet placed in Illinois will come with a $0.50 transaction fee.

Flutter CEO Peter Jackson said in a statement on Tuesday morning: "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. 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."

It is worth noting that the statement also includes the line: "Should the state reverse its decision at any point in the future, FanDuel will immediately remove the $0.50 transaction fee."

This appears to be a way of adding pressure on Gov. Pritzker, who has not yet signed the budget proposal that includes this new tax. By clearly stating that they will be passing this tax directly onto its customers, the top sportsbook in the country looks to provide a preview of the impact before it's officially passed into law.

UPDATE - June 14, 2025:

DraftKings then announced a very similar move, assessing a $0.50 surcharge on all bets placed online in Illinois. The charge will be enacted on September 1, two months after the slated July 1 tax increase. DraftKings also said that if the tax increase is repealed, they would remove the Illinois-specific fee.

Influence on other states

The implications of this law reach beyond Illinois. As the Tax Foundation notes, state tax policies often mimic one another, and this unique per-wager model could tempt other cash-strapped legislatures across the country. Some industry analysts now see it as a dangerous precedent.

But if that trend continues, it may come at a steep cost to both the industry and to individual bettors. With legal operators squeezed, small-dollar bettors penalized and migration to illegal markets increasing, the fallout could increase gambling-related harms across the board.

Public pushback against the taxes, to no avail 

Before the vote, industry stakeholders mounted a last-minute social media campaign urging Illinois residents to contact their legislators. Over 75,000 messages and tweets flooded lawmakers’ inboxes.

The Sports Betting Alliance called the law “discriminatory, punitive, and constitutionally suspect.” But even with celebrities like Rob Gronkowski and Barstool Sports personalities making their voices heard, the measure passed just before midnight.

Gambling Addiction stats, funding and treatment in Illinois

Gambling has deep roots in Illinois, from the infamous 1919 "Black Sox" scandal to the legalization of casinos in 1990 and sports betting in 2020. While the gaming industry brings in significant state revenue, it also contributes to rising rates of gambling addiction. A 2022 IDHS study estimates that 3.8% of Illinois adults (around 383,000 people) struggle with problem gambling.

In response, treatment access is expanding. Birches Health offers confidential, insurance-covered virtual therapy for gambling addiction across Illinois, including Chicago, Aurora, Rockford, Joliet, Naperville and beyond. The telehealth model allows individuals to receive specialized care from home, no matter where they live. Online group sessions are also available, providing a supportive space for shared stories and recovery.

If you or someone you love is struggling with gambling, help is available now. Birches Health provides specialized, evidence-based care tailored to each individual's needs. You don’t have to go through this alone.

Here’s how to get started confidentially with Birches:

• Book an Appointment Online 

• Call 833-483-3838 

• Email help@bircheshealth.com