DraftKings and FanDuel Stocks Fall With Illinois Sports Betting Tax Hike

DraftKings DraftKings 41,99 -2,35% and FanDuel owner Flutter Entertainment Flutter Entertainment 25,48 +0,08% saw lower trading on their stocks on Tuesday following the Illinois sports betting tax hike passed by the state Senate.

At the opening bell Tuesday, both company stocks tumbled substantially. DraftKings balanced out and continued to rise at the end of the day, while Flutter Entertainment mostly trended downward before rallying late. But over five days, DraftKings saw its stock fall by more than 17%, and Flutter Entertainment’s decreased by more than 10%.

The sharp decrease in stocks is due to new legislation passed by the Illinois Senate. The legislation introduced a new progressive tax rate structure to levy on operators within the state. The tax rate would fluctuate between 20% and 40% based on adjusted gross sports betting revenue.

Both DraftKings and FanDuel make well over the $200 million mark that would activate the 40% tax rate. This would significantly jump from the 15% they currently pay Illinois. It would make the state the second-highest tax rate in the United States, with New York having the highest at 51%.

Illinois Legislation Approves Progressive Sports Betting Tax Rate

UPDATE (May 29, 2024): HB 4951 passed the Senate, 37-22, on Sunday night. During the overnight hours into early Wednesday morning, the House eventually passed the bill with a 65-45 vote.

Assuming Gov. JB Pritzker signs the bill into law, it would go into effect on July 1, the beginning of the next fiscal year. Pritzker initially proposed increasing the sports betting operator tax rate from 15% to 35%.

Operators reporting up to $30 million in adjusted gross sports betting revenue would get the lowest tax rate at 20%. Here’s how the rates would progress as the revenue rises:

  • 25% up to $50 million
  • 30% up to $100 million
  • 35% up to $200 million
  • 40% over $200 million

There was an amendment to separate online and retail sports betting revenue. While this won’t help operators much with revenue being more dominant on the mobile side, it will help a bit overall. For example, instead of DraftKings being dinged by 40% on all revenue, they’d only receive a 20% tax rate on the retail amount.

Under the new law, every operator’s tax rate would increase significantly. Based on reported adjusted gross revenue figures for the past year, BetRivers and Fanatics would be placed at the 30% tax rate, and Caesars and BetMGM would be a step lower at 25%.

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About the Author
Brian Spaen

Brian Spaen

News Managing Editor
Brian Spaen was the news managing editor of Gaming Today. He has been a content writer and editor in various industries, including sports betting, environmental technology, and higher education. Brian is a graduate of Iowa State University and currently resides in Des Moines, Iowa.

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