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DraftKings reverses course on winning bets surcharge
The sportsbook giant no longer plans to add a tax to winning bets in select states.
Well, that didn’t last long.
Less than two weeks after DraftKings CEO Jason Robins proposed a surcharge on winning bets for bettors in four high-tax states (New York, Illinois, Pennsylvania and Vermont), the company decided to reverse course and scrap the proposal.
The company put out a statement on Tuesday evening on X, reading:
“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.”
The surcharge was announced by Robins on Aug. 1 as part of a letter to DraftKings shareholders discussing the company’s Q2 performance and proposed as a way to generate more revenue in states with tax rates above 20%. The surcharge was meant to go into effect on Jan. 1, 2025 and would have charged bettors 3-5% of their winning bets.
Although Robins opined that other operators would come to the same conclusion as DraftKings, Rush Street Interactive (owns BetRivers), Penn Entertainment (ESPN Bet) and Flutter (parent company of FanDuel) all announced during their earning calls over the past two weeks that they wouldn’t be imposing a surcharge at this time.
“As we put our customers first, it was an easy decision for us,” CEO of RSI Richard Schwartz said in a statement.
The announcement from DraftKings to deviate from its plan came very shortly after Flutter CEO Peter Jackson confirmed that FanDuel would not follow DraftKings’ initial proposal to add the surcharge. At the same time, DraftKings stock shares dropped following Jackson’s confirmation.
Many factors likely played a role in reversing course, including: social media blowback for DraftKings over the past few weeks; negative media attention garnered from the proposal; the fact that no other sportsbooks publicly said they would implement a similar tax on winning bets; and the fact that the sportsbook is entering football season – the most important time of year for generating handle and revenue.