US sports betting operators have long been grappling with ways to navigate increasingly high tax rates. But DraftKings' new idea isn't sitting well with bettors or analysts.
DraftKings spurred debated among the wagering community on Thursday (1 August) when it announced plans to implement a gaming surcharge for players in high tax states.
In its Q2 business update, the company said it has “plan to address high tax states”. That is to “roll out a gaming tax surcharge” starting 1 January 2025. This will be applied to winning bets “in any state with a tax rate above 20% that has multiple sports betting operators”. Those criteria currently apply to New York, Illinois, Vermont and Pennsylvania.
New York’s tax rate is 51%, Pennsylvania is 36% and Vermont is 20%. Illinois recently implemented a sliding scale that caps out at 40% for the highest-earning operators. The bottom of the scale is 20%.
DraftKings asserted the surcharge will be “fairly nominal to the customer”. The only ..