DraftKings Sportsbook Announces Surcharge To Customers In High-Tax States

If you’re in a legal sports betting state and haven’t paid attention to discussions about tax rates, you may want to start. One of the largest operators in the country is set to implement a surcharge to users in high-tax states starting in 2025.

DraftKings Sportsbook announced their decision Thursday. Barring a change of heart, the new surcharge will go into effect in states with tax rates higher than 20% once the calendar turns to January.

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More on the surcharge (and legal sports betting tax rates)

Documents from DraftKings state the following:

“We are planning to implement a gaming tax surcharge on a customer’s Net Winnings in any state with a tax rate about 20% that has multiple sports betting operators. The surcharge will be fairly nominal to the customer.”

The documents add that Illinois sports betting enthusiasts, for instance, can expect a “low to mid-single digit percentage” of net winnings they would have previously received. In addition, this affects DraftKings customers in the NY sports betting, PA sports betting, and Vermont sports betting industries.

This is the first time an operator has responded to recent tax hikes in this manner. Illinois saw its sports betting tax rate soar at the start of the fiscal year. New York, meanwhile, approved a 51% tax rate when online sports betting was legalized several years ago. Pennsylvania sports betting taxes operators at a 24% clip, while Vermont’s tax rate is exactly 20%.

How could this affect DraftKings and its business?

The markets affected by this decision are some of the most robust ones in the country. Other options abound, both in legal and offshore markets.

Other legal sports betting options include FanDuel Sportsbook, BetMGM Sportsbook, bet365 Sportsbook, Caesars Sportsbook, and BetRivers Sportsbook. All offer enticing sportsbook bonuses to new users and may have an opportunity to market to ones disenchanted by DraftKings.

Offshore sportsbooks, meanwhile, remain present. However, these operations are not subject to the same rules and regulations that legal operators must adhere to. They are under no obligation to offer the same financial protections to players. For these reasons, we recommend staying away from offshore outlets.