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DraftKings will not move forward with the proposed gaming tax surcharge, a decision that comes just two weeks after initially planning to implement the charge in high-tax states.
The company shared its reversal through a statement on Tuesday evening, citing customer feedback as the primary reason for the change in direction.
DraftKings had previously revealed plans to introduce a surcharge to offset the costs associated with gaming taxes in certain states. The surcharge was set to begin at the start of 2025, but the company faced potential challenges as its main competitor, FanDuel, publicly stated during an earnings call that it would not be adopting a similar surcharge. This development reportedly likely contributed to DraftKings’ decision to reconsider its approach.
In its official statement, DraftKings said: “We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge. We are always committed to delivering the best value in the industry to our loyal customers.”
The decision to abandon the surcharge could help DraftKings avoid potential backlash from customers, who might have considered switching to rival sportsbooks that do not impose additional fees.
In July 2024, the company was fined $100,000 by the New Jersey Division of Gaming Enforcement for inaccurate financial reporting, an issue that required state regulators to correct several months’ worth of sports betting data. The errors included overstating the amount of money wagered on parlays and understating other types of wagers, leading to incorrect tax filings by Resorts Digital, DraftKings’ partner in New Jersey.
Despite these setbacks, DraftKings reported a 53% year-on-year increase in revenue for Q1 2024, totalling $1.18bn. However, the company also posted an operating loss of $138.8m for the quarter, a reduction from the $389.8m loss in the same period last year, but still a sign of ongoing financial challenges.
