DraftKings may soon transform US sports betting, with a new customer fee set to begin in 2025.
The industry giant has announced that it will begin charging a surcharge on all winnings in four markets. Starting next year, DraftKings Sportsbook will begin charging a 3.2% tax on all customer winnings in New York, Pennsylvania, Illinois, and Vermont.
The controversial move is in response to major tax hikes being added in several markets, with others currently considering doing the same.
The controversial move is in response to major tax hikes being added in several markets, with others currently considering doing the same.
“In 2021, New York legalized mobile sports betting and its tax rate of 51% made it only the second state in the nation, after Pennsylvania, that has multiple sports betting operators and a tax rate above 20%.” DraftKings shred in a letter to shareholders. “For the next three years, no other states followed suit so there was no major forcing mechanism for DraftKings or any other company to address the potential for higher tax rates becoming more widespread. However, over the past several months, we have seen a shift to tax rates over 20% in certain competitive markets, including a recent significant tax increase in Illinois. We now must consider the prospect that some states may choose to tax the industry at a rate that is in excess of what we can absorb while still generating a reasonable profit margin and remaining competitive against the pervasive illegal market that pays no taxes at all.”
As of today, DraftKings remains the only sportsbook planning to add a surcharge. Several of its industry rivals have publicly opposed the idea of an additional tax on winnings, leaving DraftKings on its own.
The biggest question is what FanDuel will do. The industry leader is the only true competitor to DraftKings, and they could opt to follow suit by adding a surcharge. The operator has lost several battles with states over the last year, which could lead them to follow suit to dissuade other states from implementing significant tax hikes.
The announcement of the surcharge has been a PR nightmare for DraftKings. While the decision only affects four markets, many bettors believe it will likely spread quickly unless they push back. That has led several prominent sports betting personalities attacking DraftKings and average bettors to look for another option.
With other operators refusing to follow DraftKings' lead, the operator is in danger of losing their significant market share. With so many other platforms offering a similar product with larger payouts, there will be little reason for the customer base to stick with it. This could lead to DraftKings backtracking the idea ahead of the planned January 1 launch date.
Michael Savio covers the US online casino industry, giving readers insights and information they won’t find anywhere else. He has followed the retail industry since his time living in Las Vegas and has continued to do so as the online industry has taken off. Michael covers everything from online casino reviews to industry news, making him one of the most trusted insiders in the business. Check out Michael’s latest articles at casinos.com to see what he has to offer!
The AGA has come out strongly against the SAFE Bet Act, describing the proposed bill as a slap in the face to the efforts of states and their regulators. If passed, the bill would move almost all regulatory control over sports betting to the federal government.
Caesars Sportsbooks has been approved to launch 53 sports betting kiosks across Washington, D.C., replacing the ones previously operated by GameBetDC. The move is the result of sports betting expansion language included in the District’s 2025 budget.
Fanatics Sportsbook launched its platform in Washington, D.C., on Thursday, making it the fifth operator to go live in the market. Fanatics is now available in 22 markets across the US, making it one of the most widespread sportsbooks in the country.
Two lawmakers have proposed the SAFE Bet Act, which would completely overhaul the US sports betting industry. The proposal would reset the market, handing control over to the federal government. The bill would also add severe advertising restrictions and protections for bettors.
Circuit Court Judge Green has ruled that a lawsuit challenging a sports betting initiative lacked the evidence needed to keep it off the November ballot. That means residents will have a chance to legalize the industry in the upcoming election.
New York has reported a 29% year-over-year increase to their sports betting handle in August, a third of which was generated in the first week of the college football season. DraftKings led all operators for the first time since May with $526 million in wagers.
The IRS has sent out a press release warning bettors against using unregulated sportsbooks when wagering on the upcoming NFL season. They estimate that the illegal sports betting market in the US to be worth northwards of $700 million.
The New Jersey Division of Gaming Enforcement has levied a $33,000 fine against bet365 for offering unapproved betting options on its sportsbook. The wager in question revolved around events that were on tap delay, making them illegal under New Jersey law.
The AGA estimates that the NFL season will see around $35 billion in wagers, a 30% increase from last year. More states starting the season with legal sports betting, an expanded D.C. market, and Bovada's downfall are expected to lead to more wagers this season.
A study from the University of Bristol showed that most US sportsbooks’ social media posts do not include verbiage about responsible gaming. The AGA confirmed the study was likely correct but also clarified that sportsbooks are not required to include it in non-sponsored posts.
Hard Rock Bet has launched its online sportsbook in Illinois, the eighth market it is now live in. The brand also opened a new retail sportsbook in Rockford, giving it a significant presence in the state soon after becoming the sole operator in Florida.
The NFLPA has filed a lawsuit against DraftKings, believed to be worth about $65 million, for breach of contract related to its failed NFT marketplace. The NFLPA claims the company plans to end its rights deal and cease all future payments.
DraftKings and the Lac du Flambeau Band of Lake Superiors Chippewa Indians have agreed to a deal that will allow for a new retail sportsbook in Wisconsin. The new sportsbook will open at a casino up north, making them the first outside operator to do so.
A Massachusetts court has rejected DraftKings Sportsbook's motion to dismiss a lawsuit over its deposit match welcome bonus. That means the Public Health Advocacy Institute lawsuit will proceed, which accuses DraftKings of deceptive advertising about the offer.
A new lawsuit has been filed challenging a recent sports betting initiative to get legalization on the ballot in November. Though the group behind the initiative gathered enough signatures, the lawsuit alleges that confirming those signatures was done incorrectly.
BetMGM no longer requires bettors in Nevada to use unique accounts; instead, it allows them to use funds and bonuses from accounts set up in other states. They are the first Nevada online sportsbook to offer this seamless experience.
The Massachusetts Gaming Commission has voted unanimously to remove events from the controversial International Boxing Association from the state’s bet catalog. The move comes soon after an Olympics scandal that revealed Russia’s control of the league.
The MGC has announced that a roundtable discussion about limiting sportsbook customers will be held before the first week of October. While the state’s active sportsbooks are expected to participate, they did not attend the talk hosted earlier this summer.
Reports are that Washington D.C., is demanding documentation from Intralot as a part of an ongoing investigation. Attorney General Brad Schwalb has yet to confirm any details, including who the target of the investigation is.
The Missouri Attorney General has approved an initiative to get the topic of sports betting put on the November ballot. This will allow residents of the Show-Me state to decide the issues themselves, circumventing years of legislative roadblocks.
DraftKings has announced that it will no longer move forward with a controversial surcharge on betting winnings in four major markets with high tax rates. The decision comes soon after FanDuel other operators declined to follow suit by adding similar charges.
