The Current: The Bill Will Come Due On Dumb Sports Betting Policy Someday
Illinois' per-wager tax is the latest example of policymakers ignoring the world we live in. Gambling news roundup: Kalshi was 80% sports betting last week; sweepstakes ban update in Louisiana.
The Current is a report on something new in the gambling industry each week at The Closing Line.
The per-wager tax for Illinois sports betting appears to be all but a done deal, barring a change of heart from Gov. JB Pritzker and/or some stellar lobbying by FanDuel and DraftKings in the coming days. It’s been covered in depth by local media, mainstream media, the gambling trade press and by me.
A 25-cent tax on every wager, which can become 50 cents for the biggest sportsbooks, is patently absurd. If Illinois lawmakers just wanted to raise taxes on revenue, sure, great, do that, I guess. But this is policymaking at its worst. For starters, I guess you no longer want DraftKings and FanDuel taking small wagers?
While this may hurt sportsbooks and their bottom lines, some (or all) of this tax burden is going to get passed onto the consumer. We don’t know how that will happen, yet — it may be in either obvious or less-obvious ways. It might be worse odds, fewer bonuses, establishing minimum bets for everything. Maybe sportsbooks just start adding the tax to the bet slip. Nothing is off the table, I’d imagine.
Sometimes it feels like “crying wolf” to say that sportsbooks will eventually leave states, or drastically change how they do business, because of onerous tax obligations or regulations. Illinois is too big, and it’s likely not the line any sportsbook draws in the sand.
But it may never be a single event, or tax hike, or new reg that changes things. It’s death by a thousand paper cuts. It’s a doubling of a tax here, a new regulation banning bonuses or certain types of advertising there. It’s not hyperbole to say at some point, it all becomes too much for at least some operators.
Here’s what I do know:
The Gambling Job Corner
Looking for a job in gambling? Or are you hiring for roles right now? Check out The Closing Line’s reverse job board, where job seekers post their availability.
And here are some roles at Splash Sports, which is hiring heading into football season:
If you’d like to promote some roles you’re hiring for, ping me and I’ll list them for free. Are you looking for a job? Send me a note and I’ll get a blurb in about you and link to your LinkedIn.
Who in their right mind would enter Illinois as a new sports betting operator now? Bet365 just launched earlier this year in Illinois. I’d say there’s a chance that if this tax proposal had passed earlier, they’d be passing on Illinois.
As an upstart sports betting operator (think Underdog) or an alternative model like an exchange (think Sporttrade), there’s no way you’re coming into Illinois. You’ll just go everywhere else rather than trying to beat your head against the wall dealing with high taxes and trying to eat into the juggernaut that is FanDuel and DraftKings at the top of the market.
Speaking of which, FanDuel and DraftKings combine for 70-80% of the sports betting market at any given time. That leaves the other 20-30% or so for everyone else. If the effective tax rate keeps going up, at some point the juice is no longer worth the squeeze. We’re already at a pretty small cohort of operators serving much of the US. (FD, DK, BetMGM, Caesars, Fanatics, ESPN Bet, 365, BetRivers and Hard Rock account for most activity right now.) If the business is grinding out small margins at low market share and paying the little you keep to the state, some of these brands will stop contesting some states — or quit the market entirely — eventually.
The new tax in Illinois ignores the increasingly complex and expanding universe of online gambling options that live outside of most state regulatory regimes. Daily fantasy sports, sweepstakes sportsbooks, prediction markets and of course offshore sports betting all exist. The more you tax the regulated market, the more you are going to encourage everyone — both operators and consumers — to pursue these options. Those operators are not paying your taxes, nor do they have to follow your regulations. There continues to be a non-zero chance that nationwide sports betting via prediction markets usurps state-regulated sports betting down the road. The more difficult you make it to be a regulated sportsbook, the more everyone might end up rooting for that outcome.
Part of the goal of regulated sports betting is to create revenue for states. But the dream of post-PASPA sports betting was also supposed to be looking out for the consumer: giving them safe options outside of the illegal market, providing a vibrant market of choice, etc.
At some point, the plot was lost. And everyone — states included — might not like the end of the story.
FanDuel’s Trusted Voices: Conversations About Betting is designed to equip adults, including parents and coaches, with tools and resources to talk to young people about gambling, including information on warning signs, risks and proxy betting. The program is led by retired professional basketball player Randy Livingston and his wife, basketball agent Anita Smith, who share their personal stories related to problem gambling, with the hope of preventing others from experiencing similar harms. Learn more and join the conversation here.
Gambling news roundup
Intoxicated bettor behind threats to McCullers, police say (ESPN): “An intoxicated bettor located overseas was behind social media threats directed last month at Houston Astros pitcher Lance McCullers Jr. and his family, according to the Houston Police Department. A spokesperson for the department on Monday declined to identify the suspect or his location and said no charges had been filed. The spokesperson told ESPN that the man admitted that he had been gambling on an Astros game, lost money and was frustrated and inebriated when he sent the threats to McCullers.”
Kalshi Dominated By Sports Betting Again Last Week (Event Horizon): “Kalshi continues to be largely a platform for sports betting, with more than 80% of all trading again involving sports event contracts for the past week. Those top-line numbers are similar to last week’s data. …More than half of all betting for the week was on the NBA.”
I think there’s a real question about how much of a business Kalshi would have without sports and outside of election cycles. For as much as people like to talk and write about all the other markets at Kalshi, most of them — outside of election results — are pretty de minimis when compared to sports betting. And while Kalshi has barely even hit the tip of the iceberg on sports, it’s not clear where growth would come from otherwise in the coming years. The presidential election in three-plus years will be another huge moment for Kalshi, but sports are seemingly the only thing that can fill the gap in between.
It’s Unanimous: Louisiana Anti-Sweeps Bill Passes In House (Casino Reports): “Louisiana moved a large step closer to becoming the third state to ban online sweepstakes casinos Monday after Sen. Adam Bass’ bill unanimously passed in the House of Representatives. SB 181 is expected to reach Gov. Jeff Landry’s desk after being voted forward by a 99-0 count. It had passed in the Senate by a 39-0 vote in April. There were technical amendments inserted into the House bill by Rep. Debbie Villio, who presented it in the lower chamber. The bill will go back to the Senate for concurrence.”
Statement from the Social and Promotional Games Association: “We’re disappointed by yesterday’s vote in the Louisiana House. Legal sweepstakes platforms operate under well-established guidelines and are used by millions of adults, including Fortune 500 companies like Microsoft and Starbucks, to engage consumers through lawful, free-to-play promotions. This bill carelessly conflates legal entertainment with illegal gambling, without evidence of harm. It also threatens Louisiana’s economy by stifling digital innovation and driving compliant companies out of the state. It’s a step backward for consumer choice, lawful innovation, and common sense.”
CT Sweepstakes Casino Ban Waits On House With Session Almost Over (Legal Sports Report): “As time ticks down on the Connecticut legislative session, a sweepstakes casino ban is on the verge of passing. Last month, the Connecticut Senate passed Senate Bill 1235, which would ban third-party lottery courier services and online sweepstakes casino operators. The chamber passed it unanimously, 36-0. Connecticut’s session ends Wednesday. If the House passes the bill, it would be the fourth such state to see sweepstakes prohibitions pass both chambers.”
Parent Company Of FanDuel, PokerStars Fined For Anti-Money Laundering Violations (Casino Reports): “The top revenue-generating online gambling company in the U.S., Ireland-headquartered Flutter Entertainment, has been hit with a fine for anti-money laundering (AML) violations overseas. The Swedish Gambling Authority (SGA) found that TSG Interactive failed to collect the necessary information on the source of funds for at least nine customers, a breach of AML protocols in a regulated market. TSG Interactive operates PokerStars, the second most high-profile online gaming brand under the Flutter banner after the sports betting, daily fantasy, and online casino giant FanDuel. The SGA fined TSG the equivalent in Swedish currency of $734,000 in American money. How substantial that amount seems is a matter of perspective, as the publicly traded Flutter has a market cap of $43.3 billion.”
Missouri Sports Betting Could Benefit From New Illinois Tax (Legal Sports Report): “For years, Missouri has seen tax dollars leave its state as bettors crossed the borders into Illinois and other states with legal sports betting.
But with Illinois’ new per-bet tax beginning at 25 cents, sportsbooks could start pushing customers in the other direction this year. Missouri sports betting does not begin until Dec. 1, as regulators chose the latest possible date to launch. Missing the majority of the NFL season is never ideal for a new market but the state could see a bump thanks to the changes in Illinois. Taking bets in Missouri will mean higher margins, especially for the biggest operators as they climb Illinois’ sports betting tax ladder.”
Online Casino Discussions Back From The Dead In Maine (Legal Sports Report): “The Maine House has returned to considering a bill legalizing online casino operators after tabling it earlier this session. LD 1164 passed out of the Veterans and Legal Affairs Committee with a favorable Ought-to-Pass As Amended vote last week. The bill would legalize online casino through the Wabanaki Nations. It was previously tabled in April. The Maine legislature is in a special session, and bills can also be carried over to 2026. Previously, Gov. Janet Mills has said she would veto iGaming bills.”
Michigan regulator targets illegal online gambling: Six unlicensed operators ordered to halt services in state (MGCB): “In a continued effort to safeguard Michigan residents and uphold the integrity of its regulated gaming environment, the Michigan Gaming Control Board (MGCB) has issued cease-and-desist orders to six online gambling operators unlawfully offering services in the state. The named entities — Bonus Blitz Casino, DomGame, Royal Ace Casino, Slots Capital, Supernova Casino, and Wins Mania — have been found providing internet-based gambling without obtaining the necessary state authorization, violating Michigan’s Lawful Internet Gaming Act, the Michigan Gaming Control and Revenue Act, and sections of the Michigan Penal Code.”
Expanding sports betting, cracking down on underage gambling in play in final stretch of session (Rhode Island Current): “The Rhode Island Senate is poised to vote on a pair of bills that would open the state’s sports betting industry to new vendors and impose harsher penalties on people who allow underaged online gambling. And the odds look good for passage in the upper chamber, with longtime supporter of the state’s gambling industry, and new Senate Majority Leader, Frank Ciccone leading the charge. But across the rotunda, the fate of legislation remains unclear. Since 2023, International Game Technology (IGT) PLC has had the exclusive right to run the state’s digital sportsbook. Lawmakers now want to end that monopoly by allowing the Rhode Island Lottery to consider additional vendors when IGT’s contract runs out in November 2026 — opening the door for companies such as DraftKings and FanDuel to take wagers for the first time since the state first launched sports betting in 2018.”
Southern Baptists To Vote on Resolution Condemning the ‘Harmful and Predatory Nature of Sports Betting’ (Church Leaders): “Every year, Southern Baptists gather in June to conduct the denomination’s business, elect new leaders, and to vote on resolutions addressing the pressing issues facing the nation. While resolutions are not binding, they are meant to clarify where Southern Baptists stand on important political, theological, and ethical matters. This year, the resolutions committee has proposed eight resolutions, including one that takes aim at the ‘harmful and predatory nature of sports betting.’”
Closing Line Consulting
Niche research and analysis? Startup advice? Help with your content? I have a consultancy to help clients in gaming and beyond. Learn more about CLC here.
Want to be a sponsor of this newsletter? Email dustin@closinglineconsulting.com.
