Content on this page may include affiliate links. If you click and sign up/place a wager, we may receive compensation at no cost to you.
DraftKings introduces gaming tax surcharge in four states
The surcharge is set go into effect in Jan. 2025 in NY, IL, PA and VT.
There never seems to be a dull moment in the legalized U.S. sports betting industry. On a day where the first NFL preseason game between the Houston Texans and Chicago Bears was called off in the third quarter due to lightning (with many tickets refunded at most books – remember to always read your House Rules), that wasn’t the strangest event in the industry last Thursday.
Instead, it was DraftKings Sportsbook announcing ahead of its Q2 earning call that it plans to implement a gaming tax surcharge on Jan. 1, 2025 in four states (New York, Illinois, Pennsylvania and Vermont) on bettors’ winning tickets to help offset the higher tax rates in those states and get the company’s effective tax rate down to 20%.
The move comes in response to Illinois recently introducing a gradual tax rate that changes based on each operator’s adjusted gaming revenue (AGR), which results in DraftKings and FanDuel paying 40%, whereas some smaller operators could pay as low as 20%.
It’s a bold move and the first of its kind for an operator in the legal U.S. market. Even though DraftKings CEO Jason Robins described the tax as “nominal” for bettors, the concept predictably didn’t go over well on social media. Many bettors view the surcharge as the latest example of “The house always wins.”
Imagine walking into a Las Vegas casino, and the one time you win money at roulette, you are forced to give back some of those winnings to the casino when you walk to the cage to cash out your chips. That’s how many bettors on social media view the new surcharge.
Whether other big operators like FanDuel plan to announce a similar surcharge plan or use it as a point of differentiation for their sportsbooks is unclear.
