DraftKings to add 50-cent fee on Illinois bets amid tax hikes

BOSTON - DraftKings Inc. (NASDAQ:DKNG), the $18.8 billion market cap sports betting giant with a notable 23% revenue growth over the past year, announced Thursday it will implement a 50-cent transaction fee on all mobile and online sports wagers placed in Illinois, effective September 1, 2025, in response to recent sports wagering tax increases passed by the state legislature.

The company cited the state’s decision to "more than triple" its tax rate over the past two years as the reason for the new fee. DraftKings stated it would immediately remove the fee should the tax legislation be repealed. According to InvestingPro data, the company maintains a moderate debt level with a debt-to-equity ratio of 2.2, suggesting financial flexibility despite regulatory challenges.

"We are disappointed that Illinois policymakers have chosen to more than triple our tax rate over the past two years, and we are very concerned about what this will do to the legal, regulated industry," said Jason Robins, Chief Executive Officer and Co-Founder of DraftKings.

Robins also expressed concern that the tax increases might inadvertently benefit illegal gambling operations, noting that the "Illinois continues to fuel the rapidly growing illegal industry, which pays no taxes or fees and provides none of the consumer protections that regulated operators offer."

The Boston-based digital sports entertainment and gaming company operates in 28 states with mobile and retail sports betting, along with iGaming services in five states. DraftKings maintains partnerships with major sports leagues including the NFL, NHL, PGA TOUR, WNBA, and UFC.

The company indicated it remains supportive of "collaborative policymaking that works for the state and allows for the long-term sustainability of the industry," according to the press release statement.

Illinois has been an important market for DraftKings, with the company noting its contributions to the state through tax revenue, job creation, and investments in responsible gaming resources. While currently operating at a loss, InvestingPro analysts project the company will turn profitable this year, with revenue expected to grow by 32%. The stock is currently trading near its InvestingPro Fair Value, with 8 additional exclusive insights available to Pro subscribers through comprehensive research reports covering 1,400+ top US stocks.

In other recent news, DraftKings Inc. has been the focus of several analyst updates and strategic developments. Analysts from Citizens JMP adjusted their outlook, reducing DraftKings’ stock price target to $50, citing favorable comparisons for 2025 despite a challenging 2024. Stifel analysts reiterated their Buy rating with a $53 price target, emphasizing DraftKings’ strategic positioning to navigate new tax increases in Illinois. Meanwhile, Bernstein SocGen Group initiated coverage on DraftKings with an Outperform rating, setting a price target of $46 and highlighting the company’s growth potential in the online sports betting and iGaming sector.

Citi analysts also maintained a Buy rating with a $55 price target, noting the impact of a new Illinois tax that could affect DraftKings’ EBITDA by $30 million to $40 million. This tax, effective July 1, 2025, will impose additional costs per wager, affecting operators like DraftKings and FanDuel. Flutter Entertainment, the parent company of FanDuel, announced a new transaction fee for its customers in Illinois as a response to the state’s legislative changes. Despite these challenges, DraftKings continues to focus on revenue growth and market share expansion, with analysts noting its potential to capitalize on market opportunities.

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