FanDuel adds 50-cent surcharge on Illinois bets to offset state taxes, DraftKings may follow

Core Insights - FanDuel is implementing a 50-cent surcharge on all wagers in Illinois to offset the impact of new state taxes, which are particularly burdensome for leading sportsbooks [1][3] - DraftKings is expected to follow FanDuel's lead in response to the new tax structure [2] - The new tax structure includes a progressive tax rate that can reach up to 40% for the most successful sportsbooks, significantly higher than the previous 15% rate [3][4] Company Actions - FanDuel's new surcharge is projected to generate an additional $86 million in revenue for 2026, representing about 2% of its EBITDA [3] - DraftKings anticipates a revenue increase of $79 million from the surcharge, which would account for approximately 5.4% of its projected EBITDA for the same year [3] - Flutter has stated that if the state reverses the tax decision, FanDuel will eliminate the surcharge immediately [2] Industry Context - The Illinois tax is part of a broader trend, with other states like New Jersey, Maryland, Massachusetts, Michigan, and Pennsylvania considering similar tax increases [6] - Flutter's CEO expressed concerns that the new tax structure disproportionately affects lower-wagering customers and could drive gamblers to unregulated operators [5][6] - The CEO emphasized the need for an optimal gaming tax rate to enhance customer experience, market growth, and state revenue over time [5][7]