DraftKings Surcharge Taken Off The BoardCompany Backs Off Plan For High-Tax States |
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After facing some backlash from sports bettors, DraftKings has backed off a plan to place a surcharge on bets from players in high-tax states.
As more states continue legalizing sports betting and raising taxes on the industry, DraftKings had hoped to offset some of the financial burden via a surcharge on bets. It appears the company has now reversed that plan to pass the buck.
“We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge,” DraftKings noted on Twitter. “We are always committed to delivering the best value in the industry to our loyal customers.”
Rising Taxes For Sports Betting Operators
DraftKings was the only operator to respond with a surcharge to escalating taxes in some states, such as the recent increase in tax rate in Illinois. Lawmakers in the state have proposed raising the 15% tax rate to as high as 40%.
“The states that would have been affected were New York, Pennsylvania, Illinois, Vermont, and any other state that passed legislation that taxed operators more than 20% of gross income,” the Action Network noted of the plan.
The move may have been a harbinger of things to come. If the company had assessed an added fee for bettors to help cover tax increases, other operators may have also been emboldened to do the same.
Thus bettors also faced longer odds in profiting from bets placed on the site. The move comes as FanDuel has taken market share from DraftKings in recent months and the stock price has fallen about 25% over the last six months.
Despite the change in the surcharge, some in the industry wonder how operators will respond to rising tax rates in some states. Is there a point where the risk versus reward is too great and some may choose to exit those markets? That remains to be seen.
In related news, Penn Entertainment announced further investment in ESPN Bet as the platform has struggled to find market share over the last few months.
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