{"id":7068,"date":"2026-11-06T23:10:13","date_gmt":"2026-11-06T23:10:13","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=7068"},"modified":"2026-11-06T23:12:01","modified_gmt":"2026-11-06T23:12:01","slug":"taxed-out-how-illinoiss-per-wager-fee-could-fuel-the-illegal-gambling-market","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=7068","title":{"rendered":"Taxed Out: How Illinois\u2019s Per-Wager Fee Could Fuel the Illegal Gambling Market"},"content":{"rendered":"

Robert Douglas<\/span><\/i>\u00a0<\/span><\/p>\n

Associate Editor<\/span><\/i>\u00a0<\/span><\/p>\n

Loyola University Chicago School of Law, JD 2028<\/span><\/i>\u00a0<\/span><\/p>\n

Illinois has turned sports betting into a <\/span>major source<\/span><\/a> of public revenue, but the state\u2019s decisions may have driven bettors to pursue illegal alternatives. In July 2025, the state became the <\/span>first in the country<\/span><\/a> to institute a per-wager tax, and the legal gambling market has felt the effects ever since, as Illinois bettors increase their efforts to avoid the tax passed on to them. Each bet that moves outside that market is one <\/span>regulators can neither oversee nor tax<\/span><\/a>. Illinois should repeal, or at least reduce, its per-wager tax before it strengthens the illegal gambling market.<\/span>\u00a0<\/span><\/p>\n

The per-wager tax and its regulator<\/span><\/b>\u00a0<\/span><\/p>\n

On July 1, 2025, Illinois <\/span>became the first state<\/span><\/a> to implement a per-wager tax for online sportsbooks. <\/span>Under the new regulations<\/span><\/a>, a $0.25 tax is now assessed on the first 20 million wagers placed on a given sportsbook in a fiscal year, with a $0.50 tax assessed on all bets thereafter. The Illinois General Assembly amended its Sports Wagering Act to include the tax only <\/span>a month before its implementation<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

The Illinois Gaming Board (IGB) is the <\/span>primary regulatory body<\/span><\/a> that deals with gambling in the state. Its stated <\/span>mission<\/span><\/a> is \u201cto protect the integrity and safety of Illinois gaming while generating revenue for the state and local gaming host communities.\u201d The per-wager tax inarguably serves the second half of that mission, while hindering the first.<\/span>\u00a0<\/span><\/p>\n

Sportsbooks are passing the buck to consumers<\/span><\/b>\u00a0<\/span><\/p>\n

Of the 10 <\/span>legal sportsbooks<\/span><\/a> operating in Illinois, most, including <\/span>DraftKings<\/span><\/a> and <\/span>FanDuel<\/span><\/a>, passed the tax on to customers while <\/span>voicing their displeasure with it<\/span><\/a>. FanDuel <\/span>lifted its per-wager fee<\/span><\/a> in April 2026 but reinstated it on October 7 of the same year, with a <\/span>$0.50 charge per wager<\/span><\/a>. The fee applies to all bets placed on the app <\/span>unless the bet is<\/span><\/a> a parlay worth at least $10, a straight bet worth at least $25, or a wager made using a bonus bet. DraftKings uses a similar system, with an added exception for customers of a certain <\/span>loyalty status<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

However, the per-wager tax is not the only tax on these sportsbooks. On January 1, 2026, the City of Chicago <\/span>implemented a 10.25% tax<\/span><\/a> on the net gambling revenue of sportsbooks operating in the city. <\/span>Opponents quickly mobilized<\/span><\/a> to stop the tax, arguing that only states have the authority to implement gambling-related taxes, as opposed to cities or municipalities. Litigation is still pending, but the <\/span>tax is currently in effect<\/span><\/a>, and its costs could fall on the customer. To date, the per-wager tax has brought in <\/span>close to $127 million<\/span><\/a> in fiscal year 2026.<\/span>\u00a0<\/span><\/p>\n

The potential danger of a per-wager tax<\/span><\/b>\u00a0<\/span><\/p>\n

Illinois saw a <\/span>15% annual decrease<\/span><\/a> in legitimate bets placed as of November 2025, with many attributing the decline to the tax. Unregulated sportsbooks and offshore gambling websites remain available to Illinois bettors, <\/span>and they are quite lucrative<\/span><\/a>.\u00a0 However, <\/span>the FBI<\/span><\/a> has expressed concern about the potential risks of unregulated sportsbooks: allowing illegal operators to funnel their profits into organized crime, leaving bettors exposed to fraud, <\/span>extortion<\/span><\/a>, and theft, enabling illegal operators to function without administrative oversight and consumer protections, and increasing the likelihood of interference in sporting events.\u00a0<\/span>\u00a0<\/span><\/p>\n

Let\u2019s cut the tax<\/span><\/b>\u00a0<\/span><\/p>\n

The IGB\u2019s two goals are not aligned with this legislation. The tax raises revenue one wager at a time, but because sportsbooks pass the fee on to customers, every legal bet becomes more expensive. The integrity of the IGB\u2019s mission depends on bettors staying in the regulated market, where operators are licensed, monitored, and accountable. A tax that makes legal betting more costly pushes consumers in the opposite direction, with casual bettors, who bear the fee on smaller wagers, most likely to go.\u00a0<\/span>\u00a0<\/span><\/p>\n

This conflict has staying power. A revenue stream of <\/span>roughly $127 million<\/span><\/a> gives the state little incentive to give it up, and Chicago\u2019s tax adds another boost that remains in effect while the litigation continues. As both taxes persist, legal bettors absorb the pressure while illegal operators and their customers pay neither. Despite its financial success, Illinois lawmakers should consider removing, or at least reducing, the per-wager and other sportsbook-related taxes to avoid unintentionally bolstering illegal gambling operations in the state.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Illinois has turned sports betting into a major source of public revenue, but the state\u2019s decisions may have driven bettors to pursue illegal alternatives. In July 2025, the state became the first in the country to institute a per-wager tax, and the legal gambling market has felt the effects ever since, as Illinois bettors increase their efforts to avoid the tax passed on to them. Each bet that moves outside that market is one regulators can neither oversee nor tax. Illinois should repeal, or at least reduce, its per-wager tax before it strengthens the illegal gambling market.\u00a0<\/p>\n","protected":false},"author":183,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,1],"tags":[1877],"class_list":["post-7068","post","type-post","status-publish","format-standard","hentry","category-sports","category-uncategorized","tag-sports-gambling"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/7068","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/183"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7068"}],"version-history":[{"count":2,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/7068\/revisions"}],"predecessor-version":[{"id":7070,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/7068\/revisions\/7070"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7068"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7068"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7068"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}