Illinois Sports Betting Revenue Is Down 15% — Here’s Why

Illinois is one of the biggest sports betting states in the country — top three nationally by handle, and number one in the Midwest. So when something goes wrong in Illinois, it’s not a footnote. It’s a warning sign for the entire industry. And something has definitely gone wrong: sports betting activity in Illinois dropped 15% year-over-year after a new tax went into effect in 2025. Here’s the full story of what happened, why it matters, and what it means for bettors.

What Is the Per-Wager Tax — and Why Does It Matter?

To understand the revenue drop, you need to understand Illinois’ unusual new tax structure. Most states tax sportsbooks on their revenue — a percentage of what they earn after paying out winning bets. Illinois does that too, with a tiered system ranging from 20% to 40% depending on how much a sportsbook earns (up from a flat 15% previously).

But in July 2025, Illinois added something brand new: a per-wager tax. Instead of just taxing what the sportsbooks earn, Illinois now also charges them $0.25 for every bet placed — up to the first 20 million bets per sportsbook per year. After that, the rate jumps to $0.50 per bet.

This might sound small, but consider: if you’re placing a $5 bet, a $0.25 surcharge is a 5% added cost before you even factor in the house edge. For recreational bettors who like to place lots of small bets, that adds up fast.

Sportsbooks Passed the Cost to Bettors

When the per-wager tax hit, sportsbooks had a choice: absorb it or pass it on. They passed it on.

FanDuel and DraftKings — the two dominant sportsbooks in the state — added a flat $0.50 surcharge on every bet placed by Illinois customers. Caesars, Fanatics, and bet365 set their surcharge at $0.25. Some sportsbooks took a different approach and raised their minimum bet thresholds: BetRivers jumped from a $1 minimum to $5, BetMGM went to $2.50, and Circa set its minimum at $10.

The message was clear: small-stakes betting in Illinois just got significantly more expensive.

The Numbers Don’t Lie

The data from the Illinois Gaming Board is stark. September 2025 was the first full month with the per-wager tax in effect. Compared to September 2024, there were 5 million fewer bets placed. In October 2025, the gap widened to 6.4 million fewer bets year-over-year. Over the first four months after the tax took effect, Illinois saw approximately 27.6 million fewer bets total.

The Sports Betting Alliance (SBA) — the advocacy group that represents FanDuel, DraftKings, BetMGM, Fanatics, and bet365 — called it “astounding” and noted that while Illinois was shrinking, legal sports betting was growing in virtually every other state.

“This is a warning sign,” the SBA said. “Tax hikes are creating a lose-lose situation for fans, where they’re either being forced to pay higher fees or left to abandon the legal sports betting market.”

Where Are Those Bettors Going?

Here’s the uncomfortable truth: most of those bettors didn’t stop betting. They just stopped betting legally.

The concern from industry advocates and responsible gambling experts is that bettors driven out of the legal market by higher costs are migrating to offshore sportsbooks and illegal bookmakers — platforms with no consumer protections, no age verification, and no recourse if you don’t get paid.

“Any bettor with any level of sophistication is really paying attention to their costs,” said Sports Betting Alliance president Joe Maloney. “When you have the ability to have multiple competitive options in the legal regulated marketplace and then a myriad of options in illegal or unregulated sites, you’re going to go for the best price.”

Prediction markets like Kalshi and Polymarket have also been eating into the handle, offering a federally-regulated alternative to traditional sportsbooks that isn’t subject to Illinois’ per-wager tax. The Illinois Gaming Board issued cease-and-desist letters to Kalshi, Robinhood, and Crypto.com in April 2025, and Polymarket received a similar letter in January 2026 — but the platforms continue to operate through federal regulatory channels.

Illinois Isn’t the Only State Seeing a Slowdown

Illinois’ struggles aren’t happening in isolation. Nevada — the original home of legal sports betting — saw declining revenue in February 2026, with Super Bowl handle reportedly at its lowest level since 2016. The rise of prediction markets, the growth of offshore alternatives, and the normalization of sports betting all contribute to a more competitive, fragmented landscape where no single regulated market can take its customer base for granted.

Could the Tax Be Repealed?

Some Illinois lawmakers are already pushing back. House Gaming Committee Chairman Daniel Didech filed HB 5143 in early 2026 to repeal the per-wager surcharge. The data, he argued, shows that the tax is costing the state more in lost activity than it’s generating in new revenue. In its first half-year, the surcharge raised $62.2 million — well above the $40 million projected for the full year — but the IGB’s activity data suggests the state is leaving even more on the table through lost wagering volume.

Bottom Line for Bettors

If you bet in Illinois, you’re paying more per bet than you were a year ago — and you’re getting less competition for your business, since some operators have effectively priced out casual, low-stakes players. The broader lesson here is one the whole sports betting industry is watching: aggressive tax structures don’t just hurt sportsbooks’ bottom lines. They push bettors toward less regulated options, undermining the consumer protections that made legal sports betting worth building in the first place.