Hard Rock Bet and BetMGM are implementing minimum wager sizes in Illinois in response to the newly enacted sports wagering tax increase.

In Illinois, Hard Rock Bet is now requiring a rock-bottom bet of $2 for sports wagers of all kinds, while rival BetMGM is a little higher at $2.50.  Hard Rock was the first of the two gaming firms to announce a bet size requirement, while BetMGM, which is jointly owned by Entain and MGM Resorts International, informed patrons of the need earlier this week.

These actions are a reaction to Illinois's implementation of a second online sports betting tax in a single year. The new tax is 25 cents per wager on the first 20 million bets that an operator books, and it doubles to 50 cents per wager for each additional wager placed after the first 20 million.

The raise went into effect on July 1st and is one of almost 50 tax increases that Governor J.B. Pritzker (D) has signed into law since taking office in January 2019.

Operators' Motivation to Place Small Bets May Be Declining

The minimums set by Hard Rock and BetMGM in Illinois are reasonable and probably won't have an impact on many gamblers there.  Over half of all sports bets in the United States, according to some estimates, are for less than $10 or between $10 and $25.

But according to some gaming entrepreneurs, such as Derek Stevens, CEO of Circa, the most recent Illinois tax ploy may deter operators from placing tiny wagers in the state.

"You can kiss those $1, $2, $5, $10 bets goodbye. That’s going to be the good old days,” Stevens said on Vegas Stats & Information Network’s (VSiN) “Follow the Money” show last month.

Although Stevens was tactful in his criticism of Illinois lawmakers, his remarks are significant because Circa is the state's smallest sportsbook operator and the current tax plan, like the one from last year, places the burden on the largest books based on market share.

Superior to Transaction Fees?

The minimum bet sizes that BetMGM and Hard Rock require in Illinois deviate from the tactic used by some of their competitors in the state.  The implementation of per-bet fees by DraftKings, Fanatics, and FanDuel has been criticized by both industry watchers and bettors.

In Illinois, FanDuel, a division of Flutter Entertainment, was the first to declare a per-bet fee. DraftKings quickly followed.  The Fanatics transaction fee is half that of both operators, who charge 50 cents each wager.  If agreements can be achieved with Illinois lawmakers, all three have stated that they would be open to eliminating per bet charges.

There has been criticism in Illinois about the idea that big businesses are forcing their tax responsibilities on consumers by charging a per-bet fee.