New York Lawmakers React Strongly Over DraftKings’ Fee on Winning Bets

DraftKings planned to add a fee to winning sports bets in states with high taxes. This sparked a lot of anger from New York’s rulemakers. 

DraftKings Drops Surcharge Plan Amid Criticism from New York Regulator

DraftKings wanted this fee to help cover the cost of high tax rates. However, they dropped the idea just two weeks after they announced it. The fee would have affected winning bets in four states. New York was one of them, with one of the highest sports betting tax rates in the US at 51%.

Brian O’Dwyer, who chairs the New York State Gaming Commission, did not hold back his criticism of the plan at a recent commission meeting, reported Covers. He said he looked at the proposal with “great alarm” and thought it would mislead and hurt consumers. O’Dwyer made it clear that even though the surcharge was taken off the table, the commission plans to keep a close eye on any similar ideas. He stressed they would not think twice about saying no to proposals they believe could harm the public.

The comments from O’Dwyer highlight New York’s strong position on safeguarding consumers in the fast-expanding mobile sports betting scene. The state’s 51% tax on sportsbook earnings stands as one of the steepest in the nation, but the commission seems determined to keep this rate. The tax has brought in a lot of money for state programs, with over $50 million going to education funding since the NFL season kicked off.

DraftKings Scraps Surcharge Plan After Rival FanDuel and Customers Push Back

DraftKings rolled out its surcharge plan on August 1, 2024, right after sharing its second-quarter earnings report. But customers and rivals did not like this move one bit. Other betting companies like Rush Street Interactive and FanDuel were quick to say they would not do the same thing. FanDuel’s parent company, Flutter Entertainment, made it clear they had no plans to add a similar charge. Just hours after Flutter spoke up, DraftKings changed its mind saying they listened to what their customers had to say.

Despite pushback, sports betting companies still struggle to deal with high taxes in big markets like New York, Illinois, and Pennsylvania. Illinois has a new tax system that makes big companies like DraftKings and FanDuel pay much more in taxes. DraftKings CEO Jason Robins has hinted at ways to lessen the hit from tax hikes saying companies cannot keep absorbing such increases forever. FanDuel however, has said it might cut back on promotions in some states to handle rising taxes.