DraftKings Drops Gaming Surcharge as No Operator Follows Suit
DraftKings has decided to abandon its planned gaming surcharge after no other operators chose to implement a similar measure.
The Lone Wolf Gives Up
“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 operator wrote in the social media statement.
This decision comes right after Flutter Entertainment’s earnings call where the company’s CEO Peter Jackson said that there are no plans for FanDuel to implement tax surcharges for winning bets.
Jackson noted that the company’s plan to cope with higher taxes in states like Illinois is to cut promotional spending, which will result in fewer promotions and bonuses for players.
FanDuel is not the only operator that has ruled out introducing a surcharge at this time. Rush Street Interactive and Penn Entertainment, the parent companies of BetRivers and ESPN BET, respectively, have also distanced themselves from such moves.
In the end, DraftKings also conceded.
DraftKings Backs Out
It’s worth recalling that during its Q2 financial report, DraftKings announced plans to introduce a tax gaming surcharge, an additional fee that was set to be charged on players’ winnings starting January 1, 2025, in four states with the highest taxes: New York, Pennsylvania, Illinois, and Vermont.
The operator’s plans were met with criticism from players, many of whom vowed to stop using DraftKings’ services once the surcharge took effect.
The decision was also criticized by industry experts, who predicted that this move would lead to losses for DraftKings, especially if its main competitor, FanDuel, did not take similar steps.
DraftKings CEO Jason Robins initially argued that the decision would ensure transparency for players, as the amount charged by the operator would be clearly stated rather than hidden in margins or a less attractive offer.
Ultimately, this justification did not stand the test of time. This is particularly noteworthy given that Flutter CEO Peter Jackson openly admitted that FanDuel’s solution for dealing with higher tax rates is to cut promotional spending—something that would not be immediately visible to players.
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