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EspañolDraftKings changes course on gaming tax surcharge after listening to customer feedback.
DraftKings has decided not to proceed with the proposed gaming tax surcharge, a move announced just two weeks after initially planning to implement the charge in states with high taxes.
The company communicated its reversal through a statement on Tuesday evening, highlighting customer feedback as the key reason for changing its course.
Previously, DraftKings had unveiled plans to introduce a surcharge to cover the costs associated with gaming taxes in specific states. This surcharge was set to begin in early 2025. However, the company faced potential issues when its main competitor, FanDuel, publicly announced during an earnings call that it would not be implementing a similar charge. This likely played a role in DraftKings’ decision to reassess its strategy.
In its official statement, DraftKings stated: “We always listen to our customers, and after considering their feedback, we have decided not to move forward with the gaming tax surcharge. Our commitment remains to provide the best value in the industry to our loyal customers.”
The decision to forgo the surcharge could help DraftKings avoid potential backlash from customers who might have considered switching to other sportsbooks that don’t impose extra 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 of sports betting data. The errors involved overstating the amount wagered on parlays and understating other types of bets, leading to incorrect tax filings by Resorts Digital, DraftKings’ partner in New Jersey.
Despite these challenges, DraftKings reported a 53% increase in revenue year-on-year for Q1 2024, totaling $1.18 billion. However, the company also recorded an operating loss of $138.8 million for the quarter, a reduction from the $389.8 million loss in the same period last year, but still indicative of ongoing financial difficulties.
