DraftKings touted a significant achievement in its second quarter revenue earnings report.
The operator, which leads in sports betting handle in Illinois, reported $1.1 billion in revenue, a 26% increase from the same period in 2023.
In the report, DraftKings attributed its strong second quarter to several factors, including:
- Continued healthy customer engagement.
- Efficient acquisition of new customers.
- Expansion of sportsbook product offerings into new jurisdictions.
- Higher structural sportsbook hold percentage.
- The impact of acquiring lottery courier app Jackpocket.
The operator is live in 25 states and Washington, D.C. Along with FanDuel, it dominates the Illinois sports betting market.
DraftKings tax surcharge plan dampens bettors’ mood
With the upbeat earnings report, however, came an announcement from DraftKings that it would begin implementing “a gaming tax surcharge in high-tax states that have multiple mobile sports betting operators on January 1, 2025.”
Those states are Illinois, New York, Pennsylvania, and Vermont. With the graduated tax on operators in Illinois that went into effect at the beginning of July, DraftKings will pay up to 40% on adjusted gross revenue over $200 million. The only state with a higher tax rate is New York at 51%.
DraftKings CEO Jason Robins justified the surcharge as a response to high tax rates on operators. There is no official word on the surcharge amount, but early estimates suggest it will be around 3% of bettor winnings.
As the only operator so far to support taxing winnings to recuperate its tax burden, bettors in Illinois have reacted strongly against the decision.
Illinois monthly reports show sports betting remains strong
While there was a drop in Illinois sports betting handle from March to April, the dip was in line with cyclical betting patterns nationwide. Sports betting remained robust in the state, with a handle of over $1 billion per month for April and even into May. Most bets were made on professional sports.
May’s handle figures also revealed that the state exceeded $1 billion for the ninth consecutive month, with a jump in adjusted gross revenue (AGR) even with a decrease in handle that month. In addition, there was a 13.4% year-over-year increase in AGR in May.
DraftKings led in handle at $386.4 million in May, compared to $340 million by FanDuel. However, FanDuel was tops in AGR at $443 million, compared to $309 million by DraftKings.
