DraftKings and other sports betting stocks traded lower on Monday after Illinois passed a new tax on wagers. FanDuel parent Flutter Entertainment and Roundhill Sports Betting ETF also eased.
Illinois legislators on Saturday voted to finalize a $55 billion balanced budget, which is now waiting approval from Governor JB Pritzker. The legislation includes $800 million in increased taxes, including a new sports-betting tax that charges sportsbooks per wager, according to the Legal Sports Report.
The Sports Betting Alliance, an industry group composed of sports-betting companies including DraftKings, FanDuel, BetMGM and Fanatics, put out a statement on Monday criticizing the legislation.
"For the second consecutive year, the Illinois legislature chose to balance its budget with a crippling tax on legal online sports betting operators and their million plus Illinois customers — this time with no warning or consideration of the devastating impact this tax would have on the legal market," the SBA wrote.
The SBA argued that a per-bet tax penalizes small recreational bettors the most. Meanwhile, small bets of $1 or $2 could get hit with a 25% or 50% tax on the handle, which customers will have to pay, according to the SBA.
The alliance claims that the new tax will push customers to unregulated sportsbooks that have fewer consumer protections and generate zero taxes for the state. The SBA said it will continue to fight the legislation in Illinois and "any state that considers these harmful tax changes in the future.
DraftKings Stock, Betting Operators Fall
DraftKings stock tumbled 6% Monday on the news, falling back below its 50-day moving average. DKNG stock is down 9.3% so far this year.
Flutter Entertainment shares slid 2.7% Monday to close just above its 200-day line. FLUT stock is up 16% in 2025.
Roundhill Sports Betting declined 1.3%, nearly dropping below its 21-day exponential moving average. BETZ is trading in a cup-with-handle base with a 21.49 entry.
Penn Entertainment dipped a fraction to mark four consecutive daily declines.
DraftKings stock has a 21-Day average true range ratio of 3.56%. The 21-Day ATR for Flutter is 2.81%. Roundhill Sports and Penn Entertainment have 21-Day ATRs of 1.65% and 4.02%, respectively.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
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