How will Illinois sportsbook operators integrate the state’s new per-wager tax and how will those efforts be taxed? Those are just some of the questions the legal minds at DraftKings, FanDuel and Fantatics are trying to figure out ahead of the implementation of an onerous new tax that will definitely have an impact on their company’s bottom line.
The tax that’s got big-time operators scrambling will be applied as $.25 cents per Wager on the first 20 million bets and $.50 per Wager on the next 50 million bets. Some operators, like ESPN BET, are swallowing the cost of the tax but implementing a new $1 minimum on all wagers.
Both FanDuel and DraftKings opted to pass the fee directly on to their customers, but that plan might not work out as well as planned. Currently, it’s unclear whether or not the State of Illinois would consider a transaction fee imposed by operators as revenue. In general, the State is taking a hard line on when and where the fee is applied. This includes a fee on bonus bets and other promotions. (This also begs the question of whether or not players would even be willing to place a “free bet” if it included a $.25-$.50 fee.)
Rob Coldrake, CFO, Flutter (FanDuel) explained the conundrum operators are facing in comments reported on by Sports Business Journal saying, “Obviously, we are monitoring the situation (of whether a pass-through of the fee would be taxable) quite closely at the moment. We landed on the transaction fee as it’s quite simple for our customers to understand. It’s also more straight forward to implement from a tech perspective. So we’re monitoring and if there are some changes around the way that the fee is perceived by the state then we’ll address that accordingly.”
For now, the situation seems pretty fluid but it’s expected that that State of Illinois will be issuing more guidance for operators in the near future.