Illinois Passes 15% Tax on DFS Operators Including DraftKings and FanDuel in New State Budget

Illinois has become the latest state to formalize its tax treatment of daily fantasy sports, imposing a 15% levy on DFS operators as part of a $55.9 billion fiscal year 2027 budget approved by lawmakers early Monday morning. The budget creates a new licensing structure for fantasy sports businesses, requiring platforms like DraftKings, FanDuel, and others operating in Illinois to register with the state and pay a tax on their gross revenue from Illinois-based players. According to Democratic Representative Curtis Tarver, the licensing framework was something the DFS industry itself requested, signaling that major operators preferred the certainty of a regulated structure over the legal ambiguity that has long characterized the state’s approach.

The DFS and digital asset tax provisions combined are projected to generate approximately $65 million in new annual revenue for Illinois. The budget was passed after a lengthy overnight session in Springfield and does not raise the state’s income or sales tax, instead relying on targeted levies on higher-growth industries to fill revenue gaps.

What It Means for DFS Players in Illinois

For players who regularly use Illinois sports betting and DFS platforms, the immediate impact of the new tax is not expected to result in direct charges to users. DFS operator taxes are typically absorbed at the business level rather than passed through to individual contest entries. However, a 15% tax rate is substantial — it could eventually affect how operators structure their Illinois-specific promotions, deposit bonuses, and contest rake levels, particularly if platforms see a meaningful reduction in net margin from the state’s market.

The licensing requirement is likely to be welcomed by the larger operators, who already comply with state licensing frameworks in markets like New York, New Jersey, and Pennsylvania. For smaller or newer DFS platforms, the compliance costs and formal registration process could serve as a barrier to entry, potentially concentrating the Illinois market further around the established players.

Prediction Markets Also Taxed

The Illinois budget also extends to sports bets placed on prediction market platforms — an acknowledgment from the legislature that Kalshi, Polymarket, and similar platforms are functionally competing in the sports betting space and should contribute to state revenue accordingly. This addition comes even as Illinois is one of several states involved in federal litigation over whether the CFTC’s oversight of prediction markets preempts state gambling regulation. Including the tax in a signed budget strengthens Illinois’s position that it views these platforms as subject to state authority, regardless of the outcome of that ongoing legal dispute.

The budget’s passage represents a significant moment in how states are choosing to treat the expanding landscape of digital wagering products. Where early sports betting legislation often left DFS and prediction markets in a separate legal category, Illinois’s new budget treats them as part of the same broad taxable activity — a framework that other states may look to as a model in upcoming legislative sessions.

DraftKings and FanDuel both operate DFS products in Illinois alongside their licensed sportsbook platforms. Neither company has yet commented publicly on the specific terms of the new licensing and tax structure. Players using DraftKings or FanDuel for daily fantasy contests in Illinois can expect the platforms to comply with the new framework, though any changes to pricing or promotional structures would likely be communicated through those platforms’ terms and conditions updates in the months ahead.