Illinois sports betting plunges after new tax on wagers
New figures from the Illinois Gaming Board reveal a notable drop in sports betting activity since the state introduced a new gambling tax last year.
Initially, a US$0.25 tax was implemented on the first 20 million wagers at each sportsbook last September, and a US$0.50 tax on every wager beyond that threshold. Major sportsbook operators, including FanDuel and DraftKings, responded by passing a flat US$0.50 fee on to customers, effectively increasing the cost of placing a wager.
25 News Now cited data published by the Illinois Gaming Board that shows that 6.4 million fewer wagers were placed in the state in October 2025 than in October 2024. September’s figures had already revealed roughly a 15% drop in bets from the previous year.
This Sports Betting Alliance group links this trend directly to Illinois’s new gambling tax.
Sports Betting Alliance president Joe Maloney said, “Any bettor with any level of sophistication is really paying attention to their costs, right? So, when you have the ability to have multiple competitive entrants in the legal regulated marketplace and then a myriad number of options in illegal or unregulated sites, you’re going to go for the best price.”
State officials have yet to respond publicly to the latest figures, but some analysts argue the fee has made Illinois one of the more expensive states in the country for legal sports betting.
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The Backstory
What changed in Illinois
Illinois didn’t just raise its take on sportsbook revenue. Lawmakers layered on a per-wager levy inside the fiscal 2026 budget, effectively taxing every ticket. As part of a $55.2 billion spending plan, the state created a $0.25 fee on the first 20 million annual bets at each operator, then $0.50 on every bet beyond that. The measure arrived minutes before midnight in the session’s final hours and followed a 2024 move that pushed top operators’ effective revenue tax above 30 percent. Supporters pitched the new charge as transit funding. The budget documents show billions in transit needs baked into the plan, underscoring why lawmakers turned to gambling again to fill gaps. For details on spending and revenue goals, see the state’s Fiscal Year 2026 Operating Budget. Coverage at the time captured the breadth of the change and the speed with which it passed. Our report on the vote noted the per-bet pricing structure and the industry’s attempts to halt it in the final stretch; read Illinois raises sports betting tax as part of the 2026 budget for the legislative timeline and immediate reaction.
Warnings from Wall Street and the sportsbooks
Analysts flagged the per-bet tax as a surprise with outsized consequences, given it stacks on top of Illinois’ tiered revenue tax. In Illinois tax increase surprises analysts, Truist Securities estimated the surcharge would fall hardest on FanDuel and DraftKings, which together handle most wagers in the state. Deutsche Bank called the combined effect “punitive,” with an implied effective rate north of 60 percent once both handle and revenue are taxed. Analysts outlined how operators might respond: reduce promotions, widen odds, raise minimums or add fees. One scenario they flagged came to pass as major books introduced a flat $0.50 pass-through fee on bets, a move that makes small, high-hold wagers more expensive and could deter casual play.
Sportsbooks and their media allies tried to rally opposition before the vote. The Ringer and Barstool criticized the plan and warned of leakage to the gray market, while Barstool’s Dan “Big Cat” Katz posted a video urging fans to push back; the clip remains available on X here. After passage, the industry’s lobbying group, the Sports Betting Alliance, blasted the measure and vowed to fight similar proposals elsewhere. Its statement is posted on the Alliance’s site under a statement on Illinois’ per-bet tax. As operators implemented fees, the policy debate shifted from legislative theory to consumer impact, setting up the market dynamics now visible in state data.
Early read on the numbers
The first months under the new regime showed a split picture: fewer tickets but more money risked per bet. September’s tally brought roughly five million fewer bets year over year but a nine percent rise in handle to a record $1.4 billion, according to the Illinois Gaming Board. The average wager climbed 28 percent to $46.44, indicating smaller-stakes bettors pulled back while higher-stakes customers kept betting. That pattern and the record handle are detailed in Illinois sports bets fall after betting tax, but amount wagered hits new high. The state’s monthly reports are available from the regulator on the Illinois Gaming Board website.
Subsequent months reinforced the trend. October produced a year-over-year drop of 6.4 million wagers, the second straight month of declines in bet count. The Sports Betting Alliance pointed to pass-through fees and higher local taxes as drivers of the falloff, arguing that the policy puts the regulated market at a disadvantage. Those arguments are captured in Sports Betting Alliance blames Illinois tax hike for drop in gambling, which also notes the group’s contention that higher costs can send bettors to illegal sites offering better prices.
Chicago’s added layer and the legal backdrop
Illinois’ statewide framework now intersects with a Chicago-specific levy. The city approved a 10.25 percent local tax on sports betting revenue that took effect at the start of the year, a move the Sports Betting Alliance says compounds the statewide squeeze. That tax is being challenged in court. Simultaneously, state leaders and regulators face growing pressure to rein in offshore sportsbooks, highlighted by a letter last summer from attorneys general urging federal action. Those crosscurrents were part of the policy context in our report on September’s figures, which tracks how enforcement and taxation are moving in parallel but not always in harmony.
Analysts see few easy offsets. With Illinois no longer a new market, deep cuts to promotions or abrupt changes to pricing carry competitive risks. As detailed in our analysis of the tax surprise, the firms most exposed already run at scale and have less low-hanging cost to trim. That reality helps explain why many books opted for visible fees on each bet rather than less transparent tweaks to lines, and why smaller, parlay-heavy tickets—popular with casual users—appear most sensitive to price bumps.
The stakes for market shape and policy choices
Illinois’ approach is being watched nationally. If higher all-in tax burdens push casual bettors to sit out or shop offshore, the state risks shrinking the legal market it built since 2020. That could reduce the taxable base even as rates rise, a dynamic analysts warned about when the per-bet levy was introduced. It also influences how operators think about product mix. Parlay-heavy models may weather per-bet fees better than straight-bet volume, potentially nudging books to steer customers toward higher-margin bets. That shift can lift hold in the short run but may erode trust if pricing becomes less competitive versus neighboring states.
Policy spillovers are emerging in other areas of sports betting. In Ohio, regulators paused new rulemaking after Major League Baseball tightened limits on micro-prop wagers nationwide, a response to integrity concerns highlighted by federal charges against two Cleveland players. The move underscores that product-level restrictions can change overnight and affect operator economics. Read more in Ohio pauses updates to sports betting regulation as MLB limits prop wagers. For Illinois, the broader lesson is that tax and integrity policies can collide in ways that reshape betting behavior quickly.
What comes next will hinge on revenue results and consumer response. If collections fall short of projections, lawmakers could revisit rates or consider offsetting moves such as legalizing iGaming, an idea analysts flagged for its potential tax yield. If the state holds course, operators may deepen fee strategies or pare marketing to defend margins. Either path carries risk. Illinois’ experiment is clarifying in real time how far a mature market can absorb new taxes before bettors change course.
