DraftKings, it seems, may be on an island unto itself for its plan to institute a tax surcharge on winning bets in 2025.
During Flutter s Q2 revenue call this afternoon, CEO Peter Jackson outright said that FanDuel has no plans to institute a tax surcharge on winning bets, but will likely be decreasing promo spend in states that have high tax rates.
Our experience is that moderating levels of generosity and reducing local marketing is the best response, he said during the earnings call.
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CEO Decries Graduated Tax Rates
While FanDuel will not be instituting a tax surcharge on winning bets, Jackson did say that promotional spend and offers will likely be reduced in Illinois to counteract the newly approved graduated sports betting tax in the state.
We have no plans to institute a surcharge for winners, he said.
Jackson described the graduated tax rate as wrong and said it unfairly punishes operators that have spent the most in a state to gain a customer base. Most states, he said, are able to find a happy medium to ensure growth and financial stability.
FanDuel will likely have to pay a 40% tax in Illinois moving forward, which taxes licensed sports betting operators at higher rates depending on their monthly sports betting performance. The 40% rate is the highest rate an operator will have to pay in Illinois, and will likely be what DraftKings will have to pay each month as well.
In its revenue report, Flutter estimates that the new Illinois tax rate will likely impact revenues by $50 million. FanDuel will directly mitigate 50% of the cost in 2025 through locally optimized promotional and market spend.
Translation? Less offers for Illinois users starting in 2025.
DraftKings remains, so far, as the lone operator to institute a tax surcharge on winning bets. The gaming giant the new plan during its Q2 report on Aug. 1, with the gaming tax surcharge on winning bets being implemented for users in New York, Illinois, Vermont, and Pennsylvania.
The new surcharge will be implemented in the four states beginning Jan. 1, 2025. While the rate will vary from state to state, in the DraftKings report the company showed a winning +100 odds ticket for $10 in Illinois winning a total of $19.68, instead of the usual $20.
This puts the odds of that ticket at just about -103 with the new surcharge.
FanDuel Retains Top-Operator Spot in U.S.
Jackson noted that FanDuel s sportsbook gross gaming revenue share in the U.S. currently sits at 47%, while its sportsbook net gaming revenue share is at 51%. FanDuel s iGaming brand has a 25% revenue share.
The North Carolina launch for sports betting was strong, according to the Q2 report, with FanDuel securing a 59% net gaming revenue share in the state.
Based off of its strong performance, Flutter has set its U.S. revenue range at $6.05 billion to $6.35 billion, up from the previously set range of $5.8 billion to $6.2 billion.
