FanDuel Stops ‘Illegal Operation’ on Tribal Reservation

While the Cayuga Nation has an approved ordinance, it has no compact with New York, marking outside sportsbook operations unauthorized.

Ziv Chen

Last Updated: August 12, 2025 3:41 PM EDT • 3 minute read

FanDuel Stops ‘Illegal Operation’ on Tribal Reservation — Pictured: The Android app of fantasy sports site FanDuel is seen on a smartphone. Photo by Richard B. Levine via SIPA USA.

The Cayuga Nation announced that several of the best sports betting apps, including FanDuel, have ceased operations within its reservation boundaries after being informed that such activity violated both federal and tribal gambling laws.

The Nation’s attorney, David Burch, said that under the Indian Gaming Regulatory Act, Class III gaming, which also includes mobile sports betting, is only allowed on tribal lands if both a federally approved gaming ordinance and a tribal-state compact are in place.

While the Cayuga Nation has an approved ordinance, it has no compact with New York, marking outside sportsbook operations unauthorized. Following the Nation’s outreach, some operators voluntarily geofenced their services, according to the state’s Gaming Commission.

"Although the Cayuga Nation has enacted a valid and approved gaming ordinance, it has not entered into a compact with the state of New York," Burch explained. "Accordingly, mobile betting operations that are not expressly authorized and operated by the Nation itself violates (the Indian Gaming Regulatory Act) and the Nation's gaming ordinance, and undermines the Nation's federally protected sovereignty."

However, some operators continue to operate within the reservation, prompting the Nation to threaten potential legal action against said operators. The dispute comes amid the booming New York sports betting apps market, which has generated more than $5.6 billion in gross revenue since launch.

The Cayuga Nation maintains that unapproved operations undermine its sovereignty and violate federal law and gaming ordinance.

FanDuel adds betting fee in Illinois

As FanDuel ceases operations in tribal land, the US sportsbook has introduced a 50-cent surcharge on all wagers in the Illinois sports betting market to offset the impact of the new state transaction tax. In the wake of the new tax and FanDuel’s decision, other sportsbooks active in the state, including DraftKings and Fanatics, have also introduced fees to follow in the footsteps of their competitors.

The new transaction tax approved by Illinois lawmakers applies per wager, charging 25 cents for the first 20 million bets a sportsbook takes annually and 50 cents for each wager after that. While this new taxation hits the state’s top operators the hardest, it follows Illinois’ progressive tax hike last year, which pushed sportsbook rates from 15% to 40%.

FanDuel’s parent company, Flutter Entertainment, said the fee will be removed if the state reverses the tax. The company warned that the policy could drive players towards untaxed, unregulated operators and disproportionately affect recreational bettors who typically place smaller wagers.

FanDuel and DraftKings control about 75% of the Illinois sports betting apps market, and industry analysts estimate that the surcharge could generate an additional $86 million for FanDuel and $79 million for DraftKings in 2026.

Several other states, such as New Jersey, Maryland, Massachusetts, Michigan, and Pennsylvania, are also considering tax increases, with industry leaders bracing for broader impacts on pricing and customer experience, especially for recreational bettors.

Written by:
Ziv Chen

Ziv has over two decades of experience in the igaming and sports betting industry, having served in senior marketing and business development positions with both B2C and B2B companies, including Playtech and Microgaming. In 2019, Ziv decided to pursue his passion for writing and became a fulltime industry journalist, covering casino, sports, and gambling business news. He’s specialties include casino games and technology, US state gambling regulation, company performance, as well as gambling affiliates and marketing. As a Pitt graduate, Ziv is a diehard fan of all Pittsburgh sports teams, with the Steelers at the top of the list. In his free time, he enjoys reading crime fiction, biographies (mainly of sports personalities, but not only) and American history. Ziv’s Favorite quote: “We're going to pursue perfection, knowing full well we won't catch it, but we're going to relentlessly chase it," Mike Tomlin, Pittsburgh Steelers Head Coach.