DraftKings (NASDAQ:DKNG) saw its stock tumble by 5% on Monday, while Flutter Entertainment (NYSE:FLUT), the parent company of FanDuel, fell 3.3% after Illinois passed a new tax structure that could significantly increase costs for major online sportsbook operators. The changes came as a surprise over the weekend with the passage of the state’s fiscal year 2026 budget, which includes a new, volume-based fee system for online sports betting.
The revised legislation imposes a per-bet charge: $0.25 per wager for the first 20 million annual bets and $0.50 for each additional wager beyond that point. According to BofA Securities analyst Shaun C. Kelley, only DraftKings and FanDuel currently surpass that threshold in Illinois, making them the primary targets of the new tax measure.
Kelley estimates that this structure could push the effective tax rate for these high-volume operators from roughly 35% to over 50%. Just last year, Illinois raised the betting tax from 15% to around 35%, and this latest move adds yet another layer of financial strain.
DraftKings is expected to bear the brunt of the hike, with Kelley projecting an annualized hit of about $70 million to its EBITDA by 2025, rising to $80 million by 2026. That would represent roughly 6% of the company’s projected EBITDA for that year, assuming no countermeasures. Kelley suggested DraftKings might try to offset the impact by cutting back on customer promotions or passing on some of the added costs to users—though such steps could put the company at a disadvantage compared to smaller, less-affected rivals.
Citizens analyst Jordan Bender called the announcement “another weekend curveball” for the online betting industry. He noted that the structure appears specifically designed to target the largest players, given their market share and betting volume. Bender estimated a similar EBITDA impact for DraftKings at $79 million, or 5.4% of 2026 earnings, with FanDuel potentially seeing an $86 million hit, amounting to about 2% of its earnings.
The news has raised fresh concerns about regulatory headwinds facing the online gambling sector and has spooked investors, particularly those holding shares in the largest sportsbook platforms operating in Illinois.