DraftKings Inc. Faces Financial Headwinds Amid Illinois Tax Hike

In a significant development for the sports betting industry, DraftKings Inc., a leading daily fantasy sports contest and sports betting company, has experienced a downturn in its stock price following the introduction of a new tax in Illinois. This tax, which applies to every online sports bet placed in the state, has raised concerns about its potential impact on the earnings of sportsbook operators, including DraftKings and its competitor, Flutter Entertainment.

Impact of the Illinois Tax

The Illinois state legislature’s decision to impose this tax has led to a noticeable decline in the stock prices of both DraftKings and Flutter Entertainment. Analysts estimate that this tax could cost sportsbook operators tens of millions of dollars annually. The tax, which was included in a new state budget signed by Governor J.B. Pritzker, has been described as a surprise to the industry, adding an additional financial burden on top of existing taxes.

Market Reaction

The market’s reaction to this development has been swift. DraftKings’ stock, which closed at $35.88 on May 29, 2025, has faced downward pressure as investors react to the potential erosion of earnings. Despite this, some analysts remain optimistic about the company’s prospects. Citi analysts have reiterated a “Buy” rating on DraftKings stock, suggesting confidence in the company’s ability to navigate these challenges.

Strategic Moves and Industry Watch

Amid these financial challenges, DraftKings has continued to pursue strategic initiatives. Notably, the company has partnered with SailGP to launch sports betting offerings through DraftKings and Bet365, indicating its commitment to expanding its market presence and diversifying its offerings.

The situation has also attracted attention from prominent figures in the financial world. Jim Cramer and Wall Street analysts are closely monitoring DraftKings, reflecting the broader interest in how the company will manage the impact of the Illinois tax.

Legal Challenges and Analyst Perspectives

In addition to the tax-related challenges, DraftKings is facing a lawsuit from a bettor who claims to have used weather data to predict golf finishes, seeking $14.2 million in damages. This legal issue adds another layer of complexity to the company’s current situation.

Despite these hurdles, a recent assessment by 21 analysts provides a comprehensive view of DraftKings’ position in the market. While the tax hike poses a significant challenge, the company’s strategic initiatives and the backing of some analysts suggest potential resilience in the face of adversity.

Conclusion

As DraftKings navigates the financial implications of the Illinois tax and other challenges, the company’s ability to adapt and innovate will be crucial. Investors and industry watchers will be keenly observing how DraftKings manages these developments and whether it can maintain its competitive edge in the dynamic sports betting landscape.