A view of the FanDuel Sportsbook betting area at Belterra Park Cincinnati.
- Flutter CEO Peter Jackson outright said FanDuel has no plans for a tax surcharge on winning bets
- However, FanDuel promos and spend will likely be reduced in Illinois to offset new graduated tax rate
- Q2 report shows FanDuel has 47% sportsbook gross gaming revenue share, 51% sportsbook net gaming revenue share in U.S.
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.
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 announced 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.
Rob covers all regulatory developments in online gambling. He specializes in US sports betting news along with casino regulation news as one of the most trusted sources in the country.
FanDuel, one of the leading daily fantasy sports companies in the United States, recently announced that they do not plan to implement a tax surcharge on their customers. This decision comes as a relief to many fans who were concerned about potential price increases due to new tax regulations.
The company stated that they are committed to providing a seamless and enjoyable experience for their users, and believe that adding a tax surcharge would only serve to deter customers from using their platform. Instead, FanDuel has decided to focus on other cost-saving measures, such as reducing promotional spending.
While some may be disappointed by the reduction in promotional offers, it is important to remember that this decision is ultimately in the best interest of the company and its customers. By cutting back on promotional spending, FanDuel can ensure that they are able to continue providing high-quality services without passing additional costs on to their users.
In addition, FanDuel has reassured customers that they will still be able to enjoy a wide range of contests and prizes, as well as access to exclusive promotions and bonuses. The company remains dedicated to providing a top-notch gaming experience for all of its users, and is constantly looking for ways to improve and innovate within the industry.
Overall, while the decision to reduce promotional spending may come as a disappointment to some fans, it is a necessary step for FanDuel to maintain their competitive edge in the market. By focusing on cost-saving measures and providing a high-quality gaming experience, FanDuel is ensuring that they remain a leader in the daily fantasy sports industry for years to come.
