Even though many US states are increasing taxes, big online sports betting companies like DraftKings and Flutter Entertainment, the owner of FanDuel, should stay stable, according to a new Fitch Ratings report from June 16, 2025.
Higher Betting Taxes May Pressure Margins, Yet Top Online Operators Maintain Solid Financial Health
Higher taxes in Illinois, Maryland, and Louisiana, plus possible increases in New Jersey, North Carolina, and Massachusetts, might cut into profits. However, Fitch analysts think this will not hurt the credit ratings of top firms such as DraftKings and FanDuel. The report highlighted that these companies still have healthy cash flow, steady growth, and manage their financials well.
One of the proposals with the biggest impact being talked about is in New Jersey. Lawmakers there are thinking about doubling the tax rate on adjusted gross revenue from 13% to 25%. Even though this would put more pressure on what operators make, experts think that no single state poses enough risk by itself to cause a credit downgrade.
Even so, the wider move toward higher tax rates could cut into how much profit the industry can make. Companies might try to make up for costs by changing odds or adding extra fees, but this strategy comes with competitive risks. Competitors could attract customers with better deals, while unregulated or other betting options might become more popular.
Sports Outcomes Hurt Margins Temporarily While Legal Expansion Offers Future Opportunities
On top of regulatory challenges, recent sports results have favored bettors, leading to a short-term decrease in operator profits. Games like the NFL season and March Madness saw many favorites win, which helped players but hurt betting platforms. Fitch analysts point out that these ups and downs are part of the business and are already factored into their forecasts.
Looking forward, there is hope about the possible growth of legal sports betting into the 20 US states that have not approved it yet. While this growth might involve upfront expenses to acquire new players, it could drive long-term industry expansion and create new income sources for cash-strapped state governments.
Fitch’s main prediction assumes no big new state entries soon. Even so, DraftKings will see its EBITDA margin go up to about 23% by 2027. This growth comes from lower marketing costs and normal sports results. Flutter’s US operations should boost margins from 16.5% in 2024 to 20% by 2027.
At the same time, BetMGM, a team-up between MGM Resorts and Entain, just upped its 2025 earnings goal to $100 million. Fitch pointed out that BetMGM stays independent and will not hurt its parent companies’ credit ratings.
On the whole, online gaming companies keep proving their toughness despite regulatory and market hurdles. Their varied income sources and strong fundamentals help them maintain solid financial positions.