DraftKings Eyes Other Solutions to Deal with Taxes after Surcharge Failed

DraftKings recently gave up on its plans for a surcharge fee after it received а strong backlash from its customer base. Fans were not on board with the changes, which caused an immediate blow to the operator’s stock.

The company might have given up on the surcharge but it is still looking for ways to deal with the high taxes it faces in certain states.

Fans Were Not on Board with the Surcharge

DraftKings recently discussed the tax matter at the Bank of America Gaming and Lodging Conference. CEO Jason Robins admitted that fans did not like the surcharge at all, forcing the company to look for other solutions. He teased that DraftKings might have invested some of the money from the surcharge in new promotions, but he conceded that this solution isn’t to the fans’ liking.

Despite the setback, DraftKings is bullish on devising a proposal that will make fans happy while allowing the company to deal with the huge taxes in certain states. Robins promised that the company would pursue opportunities that would not aggravate fans.

The CEO said that DraftKings was prepared for a possible backlash, which is why it did not implement the surcharge right away. According to Robins, the company was very deliberate in its actions and had always planned to judge how customers reacted to the changes.

The best part, CEO Robins said, is that the surcharge was “very reversible.”

So we decided to throw it out there and see what the reaction from customers was, see what the reaction from state governments was, and after analyzing that, determined it wasn’t the right thing at this time.

Jason Robins, CEO, DraftKings

Despite the measure’s failure, Robins expressed pride in DraftKings’ team, which remained level-headed and disciplined throughout the process.

DraftKings Will Think of Another Solution

While Robins didn’t reveal his company’s full plans, he noted that the operator will find another way to deal with the tax hikes in various states. The tax hike in Illinois, for one, is expected to have a profound effect on the company’s business, costing it as much as $50 million in 2025.  

Tax hikes remain somewhat controversial as analysts warn that they could make legal operators less competitive than their black market counterparts.

In the meantime, the Bank of America 2024 Gaming and Lodging Conference also saw Robins comment on DraftKings’ plans for improved market share. The CEO said that he is optimistic about his company’s potential to challenge FanDuel, its main rival in the US.