Illinois Sees 15% Less Sports Bets After Implementation of New Tax

Illinois’ new per-bet tax is already reshaping the state’s sports-betting market, with the number of wagers plunging 15% in September — typically one of the busiest months of the year due to NFL kickoff, college football, and the end of the baseball season.

According to the Illinois Gaming Board, there were five million fewer bets in the month. That decline came despite the start of the football season usually delivering a surge.

Maura Possley, spokesperson for the Sports Betting Alliance of Illinois, stated that the data indicate the state’s tax hike is driving players away from the regulated market.

“It shows that bets plunged in Illinois after the law was put in place and is a red flag that Illinois sports fans are fleeing the legal betting market in favor of the cheaper, illegal market,” she said.

“Overtaxing legal betting will send bettors either outside state lines, city lines, or to the predatory illegal market and have profound negative implications for the legal market and also future tax revenues here,” she added.

Handle Up, Revenue Down

Despite the drop in the number of bets, Illinois bettors wagered $1.4 billion, a 9% increase compared to September 2024.

However, a higher handle did not translate to improved operator performance. Sportsbook revenue dropped to $103 million, down from $131 million the year before.

The new per-bet levy generated $10.6 million in tax receipts. However, despite the higher tax, Illinois collected only about $740,000 more than it did last September — a gap driven almost entirely by reduced operator revenue.

Operators Pass Tax Hike on to Bettors

Illinois lawmakers set the tax at 25 cents per wager for the first 20 million bets. After that, it rises to 50 cents. It triggered immediate adjustments from the state’s major operators. They argued that’s the only way to maintain margins after the second tax hike in as many years.

As a result, FanDuel moved first to announce a $0.50-cent surcharge on every bet. DraftKings followed shortly after, while Fanatics and Caesars imposed a $0.25-cent surcharge.

Others chose a minimum bet ranging from $1 for bet365 and BetRivers to $10 for Circa Sports.

For industry leaders FanDuel and DraftKings, the effective tax rate has now surged past 40%. That’s more than double from the 15% at the start of 2024 — the second tax increase in two years.

Warning Signs for Chicago’s Proposed City Tax

Possley warned that Chicago Mayor Brandon Johnson’s plan to impose a new 10.25% city tax on sports-betting revenue would further destabilize the market.

“This data is a warning sign for Chicago, Illinois, and other state policymakers that overtaxing legal betting will have profound negative ramifications for the sustainability of the legal market and future tax revenues for state coffers.”

Johnson proposed the city tax on sports betting revenue in addition to the state levy as part of his 2026 budget. The mayor believes the tax would bring $26 million annually to the city, which is facing a $1.15 billion deficit.

His plan needs approval from the city council to become a reality. In addition, it faces backlash from some state lawmakers. Rep. Daniel Didech introduced a bill to prohibit cities from imposing local taxes. However, the proposal will be reviewed in the next legislative session in 2026.

Prediction Markets Loom as Potential Escape Valve

If Chicago moves forward with its tax plan, the move could drive some operators away. DraftKings and FanDuel may ultimately follow the same playbook they used in Nevada. There, state regulators warned that entering federally regulated prediction markets conflicted with state gambling law. Both companies withdrew their applications there rather than risk their licenses.

Illinois has issued similar warnings. As DraftKings and FanDuel prepare to expand their prediction-market offerings in states without sports betting, they may choose to withdraw their sportsbook products in Illinois and replace them with sports event contracts. That’s especially given the Illinois Gaming Board’s notice that participating in those markets could jeopardize licensure.

Because prediction markets fall under exclusive federal oversight, those products would not contribute any tax revenue to Illinois or Chicago.