Betting News 
In a surprising turn of events, DraftKings has decided to abandon its proposed tax surcharge on winning sports bets in four states. The decision came after significant customer backlash, highlighting the company’s commitment to prioritizing user satisfaction.
“We always listen to our customers, and after hearing their feedback, we have decided not to move forward with the gaming tax surcharge. We are always committed to delivering the best value in the industry to our loyal customers,” DraftKings announced via social media and an official company statement.
The announcement about the tax surcharge was initially made during DraftKings’ Q2 revenue reports on August 1. The company cited the need to recoup losses in states where sports betting taxes are higher than the national average. The surcharge was to be implemented in Illinois, New York, Pennsylvania, and Vermont to achieve an operational effective tax rate of approximately 20%.
This plan was quickly met with opposition from customers and industry stakeholders. Prominent professional sports bettor and co-founder of Unabated, Captain Jack Andrews, voiced his discontent on social media platform X:
“If you bet in IL, NY, PA, or VT get a load of this. DraftKings will be adding a SURCHARGE to be subtracted from YOUR net winnings to pay for THEIR TAX on gambling revenue. The money they make from losing bettors. Wow. Just wow.”
Other major players in the industry were quick to distance themselves from similar measures. Rush Street Interactive (RSI), the parent company of BetRivers, was the first to publicly declare it would not implement a tax surcharge on winning sports bets. RSI CEO Richard Schwartz stated, “As we put our customers first, it was an easy decision for us.”
Following RSI’s stance, PENN Entertainment and Flutter also confirmed they had no plans to introduce a tax surcharge on winning bets in any state. Flutter CEO Peter Jackson emphasized during the company’s earnings call, “We have no plans to institute a surcharge for winners.”
Similarly, PENN Entertainment CEO Jay Snowden remarked that while the surcharge was an “interesting” idea, the company would not be implementing it.
Although DraftKings has scrapped the tax surcharge plan, it is anticipated that the company will explore other cost-saving strategies. Possible measures include cutting promotional spending or reducing offers to players in New York, Pennsylvania, Illinois, and Vermont to offset the high tax rates.
FanDuel is likely to adopt a similar approach, particularly in Illinois starting in 2025. During today’s earnings call, Jackson mentioned, “Our experience is that moderating levels of generosity and reducing local marketing is the best response.”
Jackson criticized the graduated tax rate, describing it as “wrong” and arguing that it unfairly penalizes operators who have heavily invested to build a customer base. He noted that most states manage to find a balance that promotes growth and financial stability.
Both DraftKings and FanDuel are facing a 40% tax rate in Illinois, the highest in the state, applied based on their monthly sports betting performance.
