DraftKings caves in and drops surcharge plans

DraftKings has stirred the spirits in the sports betting segment, saying that it would consider implementing an extra levy on player betting, known as a surcharge.

The surcharge, a miniscule amount on the face of it, was designed to help the company navigate the financially challenging markets in New York, Illinois, Pennsylvania and Vermont where mounting tax levies have made it very hard for the company to compete locally and offer competitive odds.

DraftKings rethinks strategy and drops surcharge levy

The surcharge was immediately criticized by sports bettors causing DraftKings’ stock to take a slight tumble. Even then, Company CEO Jason Robins said that his company would see through the surcharge and implement it in the four aforementioned states no matter what, and beginning on January 1, 2025.

No more. DraftKings has now issued an overnight statement in which it said that no plans to implement the surcharge would be enacted, citing its player base’s concern about the tax.

"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," a statement sent over email revealed.

DraftKings was hoping to scoop up as much as $270m from the surcharge, at least based on third-party reports. DraftKings recently had to shutter its NFT marketplace, as the company said that it is facing increasing scrutiny in the non-fungible token market, and has vowed to reimburse customers.

However, the surcharge controversy was a bit too much for players who rallied against the proposal.

FanDuel Deals a Blow to DraftKings’ Reputation

What about FanDuel? The Flutter Entertainment-owned company was fairly quiet about the surcharge, taking its time to study the potential upsides and downsides.

Just yesterday, during the company’s earnings call, however, the betting giant confirmed that it would not be introducing such an extra tax.

This immediately saw FanDuel’s stock climb and sent DraftKings down a notch. It was not immediately clear when DraftKings first announced the idea of a surcharge two weeks ago whether others would follow the company’s example.

Now, though, FanDuel, DraftKings’ biggest rival, has found it only appropriate to put speculation aside, and has emerged as the more noble of the two. Other companies, such as ESPN Bet and Caesars Sportsbook have mostly kept quiet on the matter, perhaps awaiting to take their cue from FanDuel.

Now that DraftKings has dropped its own plans for a surcharge, players can all let out a breath of relief as no such levy is coming.

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