Less than two hours after Flutter (FanDuel) stated with no uncertainty that it would not move forward with a sports betting surcharge in states with high tax rates, DraftKings has reconsidered it’s original position to tax bettors on winnings.
Illinois sports betting would have been one of four markets to feel the effects of this surcharge.
In a tweet, the company made the statement in black and white:
DraftKings Statement on Gaming Tax Surcharge pic.twitter.com/cucbsQJIVD
— DraftKings News (@DraftKingsNews) August 13, 2024
No one joined the DraftKings parade
After statements from no fewer than three operators expressed that they would not implement a surcharge on winning bets in New York, Pennsylvania, Illinois, and Vermont, DraftKings’s decision seemed increasingly isolating.
It began last week when Chicago-based Rush Street Interactive (BetRivers) released a statement saying it wouldn’t follow DraftKings’ lead.
That was followed by PENN Entertainment’s (ESPN Bet) Q2 earnings call where CEO Jay Snowden announced that a betting surcharge was not on ESPN Bet’s radar, but that it would follow the situation closely.
Those books control small percentages of the market and don’t necessarily signal a trend as they would not be paying the high tax rate sportsbooks like DraftKings will pay in Illinois. Howeer, when Flutter (FanDuel) made its move and said no to a betting surcharge, DraftKings’ position crstalized.
Flutter made it clear today that DraftKings was indeed on its own. The announcement came during Flutter’s Q2 earnings call when the company stated that it had no intention to offer a surcharge.
Two hours later, DraftKings posted the above tweet. The official statement indicated that DraftKings was listening to its customers who, if you were following the reaction on social media, expressed strong disapproval to the proposal. Did FanDuel’s decision factor into DraftKings’ change of course? We could at best say there was a correlation, but DraftKings has not stated or implied a causation.
Illinois graduated tax rate took effect last month
July marked the first month Illinois online sportsbooks had to pay the new tax rate.
All operators start at a 20% tax rate, and pay more in taxes as their adjusted gross revenues increase.
It will take a few months before operator revenue totals start reflecting the increased rates, and, for now, it appears that bettors will not see any surcharges on their winning bets to offset the increased tax burden.
