When the news broke earlier this week that Flutter, and later DraftKings, were planning on adding a $0.50 transaction fee for each wager made on their platforms, the industry took note.
Some hailed it as a brave move to highlight how out-of-touch some authorities had become, while others questioned whether it was worth driving away customers to do so.
It all begs the question: Are Flutter and DraftKings now too big to fail in the Prairie State? The Gambling Insider team sat down to discuss what possible outcomes this decision could create.
Will Underwood: Yes – players will favour continuity
Two months on from the trade tariff debacle that rocked the entire world economy, Donald Trump and Xi Jinping’s cross-continental presidential spat has seemingly cooled to a luke-warm temperature – with the threat of global economic collapse having cooled to a similar degree (touch wood).
Of course, as we learned in 2008, what happens when the world economy actually collapses is the bankers, lawmakers and wholesalers responsible face lifetime prison sentances, complete legislative reform is implemented and the lives of ordinary people improve over time.
Just kidding! In reality, ordinary people lose their jobs, their homes and – in the long term – end up paying for the entire thing with their own hard-earned money.
Now, the contention between the Illinois State Government and major US gambling operators is of course a footnote at best in comparison to some of the larger global economic and political developments of the week. However, within the context of our industry, it is big news. Further, in microcosm, it is also a parallel chain of events to what we observed earlier in the year between the world’s two most powerful political leaders.
Disagree? Well, when the threat of significant tariffs from the US arrived on Chinese shores, Beijing reacted by immediately imposing a 145% trade tax on all US imports. Flutter’s equivalent reaction – now unsurprisingly emulated by DraftKings – is indicative of the same old story of two opposing hugely powerful entities pushing their own agendas at the expense of the people, or in this case players, who inevitably pay for the whole thing.
And they will pay.
Of course, both the Illinois Government and the duopoly of operators will present reasonable arguments for player protection driven by legitimate anti-black market sentiments (but not at the expense of their own taxes / overheads). All this may be true, yet Flutter’s knee-jerk transaction fee reaction reeks of an intentional message, reverberating out towards other US states, that says, 'this is what happens.'
Conclusively, a state market as large as Illinois is unlikely to be irreversibly impacted by these developments. Some players may look towards the neighbouring regulated and established Michigan market. However, most players – especially those based in the US’ third-largest city of the sports-obsessed Chicago – will bite the bullet and pay the transaction fee. They will do so in favour of their already established (and no doubt heavily personalised) account and to avoid the overall hassle of shifting providers, investing in a functioning VPN or driving over state lines to place a bet. And in so doing, they will serve to further inflate the profits of already eye-wateringly profitable entities who – in reality – could have feasibly swallowed the pill.
Megan Elswyth: No – customers will leave if they feel disrespected
It would certainly be a big ask for FanDuel and DraftKings to absorb the upcoming $0.50 per-wager fees in Illinois. But is it an even bigger ask to offset this onto the customer? Well, after talking to some, it seems like it.
Those we spoke to all agreed on one thing: Why would we stay? Not only does a $0.50 per-wager fee eat into potential winnings, it feels insulting to the player. People don’t want to stay somewhere if they feel disrespected, even if it’s ‘just’ a sports betting app. FanDuel and DraftKings might have the lion's share, but they still have competition. Not only with other legal bookies like bet365, Fanatics and Caesars (do not forget Rush Street Interactive saying it would be against imposing a customer surcharge last August!) – but also offshore bookies.
Some companies don’t realise that, to the standard bettor, unlicensed bookies aren’t as scary as they are to us in the industry. Many of them don’t even fully understand what it means to be unlicensed; player education has fallen short so far. If a platform is well-known and well-regarded on places like Reddit, players aren’t likely to look much further.
If these operators run a marketing campaign highlighting no per-wager fees in Illinois, it could be the obvious choice for players. They might be counting on the Illinois Government to be the ‘losers’ if players flock to offshore brands, as the state would receive less taxes, but who would the ‘winners’ be?
The other recurring point made by sports bettors was that the $0.50 per-wager fee was, in fact, a $0.50 per-wager fee. It didn’t matter whether they were wagering $1 or $100, the flat fee would remain the same, but would be felt more harshly by casual bettors. If you like to flutter a few dollars a month on your favourite team, Flutter is going to make you pay for it...
Losing was also a sore spot; paying a percentage of the winnings was understandable to some, but paying for the privilege to place a losing bet is going to feel like you’re being kicked while you’re down.
Ultimately, Flutter and DraftKings may be overestimating how the standard punter views the market. Many players don’t feel enough brand loyalty towards bookies to stay if they’re feeling disrespected and, in the age of information, no one wants to look foolish for paying more than they should for a service that someone else is getting for free.
Tim Poole: Yes – FanDuel and DraftKings are sending a message
FanDuel's move here is unprecedented. DraftKings was bound to follow suit but what's interesting is that, when the brand introduced its own surcharge plans in 2024, it quickly U-turned – largely after FanDuel refused to do the same.
Of the two, then, FanDuel is clearly able to utilise the power and resources of its parent company, Flutter, to lead a little more forcefully. Nevertheless, between these two organisations, there is enough sway to dictate whole markets – and we are seeing that in Illinois.
Undeniably, some bettors will turn away – moving over to the black market but equally creating opportunity for licensed competitors like Caesars, BetMGM, bet365 and Rush Street Interactive.
But talk of a mass walk-out at the two biggest US betting brands by some distance? I don't see it.
Personally, if I had to pay a $0.50 fee for every bet, I'd think a bit more carefully about each wager, sure – but I'd still do it. For those wagering $100 and above, those betting a handful of times a weekend or for those betting again using winnings already in their account, this $0.50 expense will also be much less of a barrier to entry. That will account for a huge portion of the market.
The fact FanDuel and DraftKings have so confidently put this transaction fee forward suggests a calculated risk. It is a ruthless response in many ways and, most importantly I feel, it is sending a message.
DraftKings CEO Jason Robins said he is "disappointed that Illinois policymakers have chosen to mare than triple our tax rate over the past two years." Let's also not forget that, in New York, where we regularly see over $2bn posted in legal mobile sports betting handle per month, gross gaming revenue is taxed as high as 51%.
To me, this is Flutter and DraftKings warning other states: 'Don't be too hasty with our taxes, because we hold the ultimate power here.'
What do you think – are Flutter and DraftKings now too big to fail?
