DraftKings to implement a customer surcharge in high-tax states

**The Buzz** · 2 August 2024, 6:47 am

DraftKings has sparked outrage among sports bettors by announcing plans to impose a gaming tax surcharge on net winnings in Illinois, New York, Pennsylvania, and Vermont.

The surcharge, set to take effect on January 1st, was revealed prior to the company's Q2 earnings call and is being framed as a "solution" to address increasing tax rates.

From Sports Handle:

“There is a solution here,?DraftKings CEO Jason Robins said in a letter to shareholders. “As you know, many revenue-based taxes are passed along to the consumer. The online gaming industry has not pursued this approach in lower tax jurisdictions, but it has in higher tax jurisdictions such as Germany."

Illinois raised its tax rate earlier this year, and New York (51%) and Pennsylvania (36%) are states with large populations and significant tax rates compared to other jurisdictions. Robins believes the surcharge effectively alleviates some of the financial challenges posed by the tax rate.

DraftKings?letter to shareholders didn’t mention specifics on the size of the surcharge, but Robins wrote “the surcharge will be fairly nominal to the consumer.?In Illinois, Robins says the surcharge will be a “low to mid-single digit percentage?of a customer’s net winnings.

Read more here: https://sportshandle.com/draftkings-...mplementation/

**bpmee** · 2 August 2024, 6:17 pm

Well now there are two options:
1) Be the sportsbook that doesn't charge the fee in a high tax jurisdiction.
2) Join the bandwagon, just like when banks started charging ATM fees (Cashpoint in the UK).

My guess is most will go with #2, given the current US market is a de facto oligopoly comprised of DK, FD, and maybe BetMGM or Caesars on a good day.

I also imagine players in those states will simply throw up their hands and play "elsewhere" (read offshore).

**NoDepositCasinos** · 8 August 2024, 2:27 pm

Originally Posted by The Buzz

DraftKings has sparked outrage among sports bettors by announcing plans to impose a gaming tax surcharge on net winnings in Illinois, New York, Pennsylvania, and Vermont.

The surcharge, set to take effect on January 1st, was revealed prior to the company's Q2 earnings call and is being framed as a "solution" to address increasing tax rates.

From Sports Handle:

Read more here: https://sportshandle.com/draftkings-...mplementation/

I don't think this will end well for them. I believe they are not considering the emotional component of players and the loss aversion that we all humans have. As Bpmee said, many will simply play elsewhere.

**The Buzz** · 14 August 2024, 8:00 am

UPDATE: Just two hours after FanDuel announced it would not join its rival DraftKings in charging bettors a winner’s surcharge in high-tax states on Tuesday, DraftKings canceled its surcharge plan in a surprise move.

https://frontofficesports.com/fandue...s-winner-fees/

Originally Posted by The Buzz

DraftKings has sparked outrage among sports bettors by announcing plans to impose a gaming tax surcharge on net winnings in Illinois, New York, Pennsylvania, and Vermont.

The surcharge, set to take effect on January 1st, was revealed prior to the company's Q2 earnings call and is being framed as a "solution" to address increasing tax rates.

From Sports Handle:

Read more here: https://sportshandle.com/draftkings-...mplementation/

**bpmee** · 14 August 2024, 10:25 am

Thanks for that. Color me surprised but they might revisit that option later.

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