DraftKings Stock Falls Amid New Illinois Online Sportsbook Fee
Shares of DraftKings dropped by 5% following the passage of new legislation in Illinois that imposes additional charges on online sportsbook operators. Alongside DraftKings, Flutter’s shares also declined by 3.3% as investors reacted negatively to the unexpected fee increase incorporated in Illinois’ FY26 Budget. The new incremental fee structure targets high-volume operators, intensifying market concerns.
Details of the New Fee Structure
BofA Securities analyst Shaun C. Kelley explained that the new tax would charge operators $0.25 per wager for the first 20 million wagers and $0.50 for every wager beyond that threshold. Since only DraftKings and FanDuel exceed 20 million wagers annually in Illinois, this measure is expected to push their effective tax rate from around 35% to over 50%. This change follows a prior tax increase that shifted the rate from 15% to roughly 35% last year.
Potential Financial Impact on Major Operators
Kelley projected that the additional tax could result in an annualized EBITDA drag of about $70 million for DraftKings in 2025, rising to approximately $80 million in 2026 – roughly 6% of the company’s EBITDA for that year before any mitigation efforts are implemented. He also noted that DraftKings might explore options such as reducing promotional spending or transferring part of the fee burden to customers, though these strategies could leave them at a competitive disadvantage compared to smaller operators.
Industry Reaction
Citizens analyst Jordan Bender remarked that the new tax measure appears deliberately targeted at affecting major players like DraftKings and FanDuel due to their high wagering volumes. Bender estimated that DraftKings could face a gross impact on 2026 EBITDA of around $79 million (5.4%), while FanDuel might see about $86 million (2.0%) deducted from its EBITDA.
Investor Concerns
The announcement of the fee structure has raised serious concerns among investors regarding the added financial strain on leading online sportsbook operators. This uncertainty contributed to the decline in stock prices observed for both DraftKings and Flutter.
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