DraftKings Rescinds Tax Surcharge on Bettors Amid Backlash

DraftKings Rescinds Tax Surcharge on Bettors Amid Backlash article feature image
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Photo by Erica Denhoff/Icon Sportswire via Getty Images. Pictured: DraftKings Billboard at Fenway Park

DraftKings has rescinded its plan to charge bettors a fee on all winning wagers in certain states starting in 2025.

That was amid substantial backlash throughout the betting public and regulators. No other sportsbook decided to tail DraftKings and enact similar measures, with FanDuel, ESPN BET and BetRivers declining to follow suit. Other sportsbooks did not publicly comment on the matter.

The new policy would have had bettors in high-tax states foot part of the company's tax bill on every winning wager, even if future losses resulted in a net negative for said bettor. In addition, bettors are required to pay their own, separate taxes on winnings.

In effect, DraftKings was attempting to dump a fee onto consumers — one that no other major sportsbook has implemented across the world. The fee could have spelled doom for bettors if other sportsbooks decided to enact similar measures.

The states that would have been affected were New York, Pennsylvania, Illinois, Vermont and any other state that passed legislation that taxed operators more than 20% of gross income.

DraftKings' salvo took place as it slowly loses market share to FanDuel, especially in new states, and with its stock price sliding in recent months. Over the last six months, $DKNG is down over 26% as of the end of trading on Tuesday, including over 11% since the announcement was made.

The company recently lost one portion of their business, as well: NFTs. DraftKings shut down its Reignmakers derivative in July after a federal judge permitted a class action lawsuit to advance that alleges the company had been selling illegal securities.

About the Author
Avery Yang is an editor at the Action Network who focuses on breaking news across the sports world and betting algorithms that try to predict eventual outcomes. He is also Darren Rovell's editor. Avery is a recent graduate from Northwestern University's Medill School of Journalism. He has written for the Washington Post, the Associated Press, Sports Illustrated, (the old) Deadspin, MLB.com and others.

Follow Avery Yang @avery_yang on Twitter/X.

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