2 days ago
FanDuel appears ready to sacrifice bettors on the altar of lower taxes
FanDuel appears ready to sacrifice bettors on the altar of lower taxes
Last week, we talked about the new online sports betting tax in Illinois that would hit operators with a 25 cent fee for each of the first 20 million bets they take and a 50 cent fee for every bet after that -- and how those operators appeared ready to pass those fees on to customers. On Tuesday, FanDuel became the first operator to do just that.
In response to the new Illinois tax (which followed a separate increase in 2024), FanDuel announced the addition of a 50-cent transaction fee for every bet by Illinois customers beginning Sept. 1, which is two months after the tax goes into effect on July 1 and, according to InGame, the month when the operator is likely to hit the 20-million bet threshold that triggers the 50-cent tax. FanDuel would effectively eat the first two months of the tax at 25 cents.
"Should the state reverse its decision at any point in the future, FanDuel will immediately remove the $0.50 transaction fee," the statement said. If that doesn't make obvious what FanDuel is attempting to do -- use bettors to pressure lawmakers into retracting the new tax -- Flutter CEO Peter Jackson's words should:
"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."
It's all right there. FanDuel isn't wrong that this transaction fee has the potential to push some customers to unregulated operators -- particularly if other regulated operators follow suit with their own fees -- but that can only happen if said operators are passing the fee to customers in the first place. Remember, this is originally a tax on the operator. Then again, that seems to be the point.
Bettors are set to get the raw end of this deal, and FanDuel is doing its part to make sure lawmakers get the blame. Whether that's fair is a question for someone smarter than myself. I have no clue whether the new taxes actually are too exorbitant to expect operators to continue eating the costs. But that's obviously what they want us to believe, and they appear willing to sacrifice customers to prove as much -- because not everyone is going to care the reasons behind why a $1 bet is costing them $1.50. They'll just take their business elsewhere.
After last year's Illinois tax increase, DraftKings announced its own plans for a surcharge that never actually saw the light of day after other operators didn't follow suit. This time, it's FanDuel putting its brand loyalty to the test in what feels like an attempt to make lawmakers to reverse course. But with three months before these transaction fees are set to hit customers, that pressure will eventually shift to FanDuel to follow through. The unfortunate part about this game of chicken between operator and government is that bettors are the ones caught between the headlights.
