UPDATE: Since this article was originally published, DraftKings has announced it will not pursue a surcharge on winnings in high-tax states.
FanDuel Sportsbook won’t follow the lead of one of its competitors.
In an earnings call Tuesday, the operator’s CEO declared it did not plan to implement a surcharge on winning sports bets in high-tax states. A DraftKings announcement earlier this month sent shockwaves through the industry, but for now, it appears they’ll be alone.
No surcharges from FanDuel Sportsbook
FanDuel Sportsbook CEO Peter Jackson referenced the DraftKings plan in his comments. Unlike FanDuel’s most prominent competitor, he says his sportsbook has no designs on implementing an additional fee to bettors who cash tickets.
“We find that moderating levels of generosity and local marketing is the best response,” he said, implying that customers with access to high-tax industries may not receive as many sportsbook bonuses.
Specifically, this philosophy most affects NY sports betting and Illinois sports betting enthusiasts. New York’s tax rate of 51% is the highest in the nation. Meanwhile, the new graduated tax rate in Illinois taxes operators at up to a 40% clip, depending on revenue.
The comments were part of an earnings call that featured plenty of good news for shareholders. FanDuel Sportsbook generated $3.61 billion in revenue this past quarter, easily topping its own estimate of $3.37 billion. This was met with enthusiasm in the stock market. Flutter Entertainment (FanDuel’s parent company) saw share prices soar to more than $211 in after-hours trading.
Differing philosophies of FanDuel and DraftKings
DraftKings is combating higher-than-desired tax rates with this surcharge, which is expected to go into effect in 2025. In addition to New York and Illinois, this will also affect customers in the Pennsylvania sports betting and Vermont sports betting markets.
Jason Robins, the CEO of DraftKings, said the surcharge would be “fairly nominal.” According to ESPN, a $10 winning wager placed in Illinois at odds of even-money (or +100) would return $9.68 in profit, rather than $10.
FanDuel Sportsbook, however, seems content to go a different direction, and Jackson didn’t mince words on the call.
“We have no plans to introduce a surcharge for winners,” he said tersely, declining to go into further detail when asked about the stance later in Tuesday’s call.
