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FanDuel has paid more than $2.5 billion in taxes to states
The sportsbook has paid more in taxes than any other sports betting company.
You can’t accuse FanDuel Sportsbook of not caring about education in the United States.
Speaking at the National Council of Legislators from Gaming States in Pittsburgh last week, FanDuel’s Cesar Fernandez reported that the company has paid more than $2.5 billion in taxes to states across the country. Most states use tax revenue from gaming to fund education, among other practical applications.
FanDuel is locked in a competitive race with DraftKings atop the pecking order for sports betting operators in the U.S. market. In the second quarter of 2024, DraftKings slightly edged out FanDuel in betting handle (38% to 36.5%.) With that being said, the two companies are far and away the top two most popular sportsbook operators in the country.
Despite falling behind in market share, FanDuel still has a sizable advantage when it comes to gaming revenue. FanDuel generated nearly 46% of the country’s gaming revenue in the second quarter, while DraftKings came in at just under 33%. Most states tax operators based on their gross revenue. Tennessee is the only state that taxes operators based on their betting handle.
FanDuel has made sizable tax payments
FanDuel has an online and/or retail sportsbook in 25 states, plus Washington D.C. The company has been an integral part of the industry since the repeal of PASPA in 2018, which allowed states outside of Nevada to legalize sports betting. As a result, FanDuel is a top-2 option in nearly all states it operates in.
As the sports betting industry grows across the country, so does FanDuel’s revenue. As a result, so does its tax obligation to states. Over the past four years, the operator has paid more than $2.5 billion in taxes.
- 2020: $139 million
- 2021: $361 million
- 2022: $886 million
- 2023: $1.2 billion
With a little less than half the year remaining, expectations are that 2024 will feature a new high for FanDuel’s tax payment.
FanDuel opposes high tax rates
No sportsbook has paid more in taxes than FanDuel. That’s the downside of having the highest revenue in the industry. However, there’s a bubbling industry trend that has some executives at FanDuel worried.
Illinois recently raised its tax rate on sportsbook operators. The state will now collect 40% of gaming revenue once operators pass a certain threshold. This rate is more than double the state’s previous number at 15%. In addition to Illinois, Ohio also doubled its tax rate on gaming operators from 10% to 20% earlier in the year.
The largest market in the country is currently New York. Much to the chagrin of FanDuel and other operators, New York also has the highest tax rate in the country at 51%. New York legislators recently said they have zero interest in lowering the tax rate any time soon. Since the market went online in January of 2022, FanDuel has paid over $1.1 billion in tax payments to New York State.
FanDuel certainly hopes more states don’t follow in the footsteps of Illinois and Ohio or take note of the success in New York despite its high tax rate. Operators continue to argue that high tax rates slow the growth of the industry. They also caution that lesser promotions and worse odds caused by the high tax rate could lead bettors to pursue other options at unregulated, untaxed illegal sportsbooks.