DraftKings’ Tax Surcharge Move Slammed as “Terrible Idea” by Almost Entire Industry
One decision has ensured DraftKings a spot on the front pages of all industry portals for at least a week. The introduction of the Gaming Tax Surcharge has caused considerable consternation in the industry, both among players and experts. Opinions are not very diverse and generally range from viewing the operator’s move as “bad” to “very bad.”
DraftKings’ Players Plan to Leave?
The idea of introducing the Gaming Tax Surcharge can be viewed from multiple perspectives. In the pages of US iGaming Hub, we have so far examined the most immediate context—the operators’ response to excessively high tax rates.
However, it seems that there is much more at play here, both in terms of the reasons behind the move and its potential consequences. At this moment, we cannot even be certain whether the additional fee on winnings will actually be implemented, as there is still plenty of time for DraftKings to change its decision.
Will the competition call DraftKings’ bluff? We may find out soon, as Flutter and Penn Entertainment are set to present their financial reports shortly. Other operators now face a unique opportunity to deliver a serious blow to the giant. Player opinions regarding the “nominal” amount DraftKings plans to deduct from winnings are highly critical, with many openly stating that they would stop using the operator’s services under such circumstances.
Player comments are not limited to promises of switching to competing operators. Many express their frustration by assuring that if the Tax Surcharge goes into effect, they will turn to black market operators. It seems that this reaction could intensify if other leading sports betting market operators decide to follow DraftKings’ lead.
Stock Market Blow
The stock market also reacted very negatively to DraftKings’ announcement, with the company’s share value experiencing a decline of over 10%.
“There is only one sensible thing for the DraftKings board to do now – publicly dump the policy, say sorry, and move on,” says the team at Regulus Partners.
Analysts at Deutsche Bank share a similar sentiment: “We find it hard to imagine a customer leaving a casino and having to square up taxes on their winnings with the casino prior to departure, without thinking maybe next time they will try a different venue.”
“Pay Your Own Taxes!”
On a less serious note, a blunt post by Jon Metler from Covers has also gone viral on social media.
The industry’s reaction was swift and merciless towards DraftKings. Quant Coach concluded his publication on the matter by calling on the operator to “pay your own taxes,” while Dustin Gouker from The Closing Line labeled it in his headline as a “terrible, horrible, no good, very bad idea.”
At this point, it is impossible to predict how the Tax Surcharge issue will unfold. If DraftKings intended to casually test player reception of this solution, they have received a clear response from nearly the entire industry in recent days. However, the operator might be waiting for the opinions of those who have yet to speak but will be compelled to do so soon: their direct competitor, Flutter, as well as the less direct competitor, Penn Entertainment.
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