By Sean McDonnell
cleveland.com
(TNS)
DraftKings will not charge additional fees to winners in “high-tax states,” the company announced on Tuesday.
The sports betting company announced that it would abandon its plan to impose a “gambling tax surcharge” on winning bets in 2025. Two major competitors had previously said they would not impose fees.
In a statement posted online and sent to the media, DraftKings said it had listened to customers and “after hearing their feedback, we have decided not to continue implementing the gambling tax surcharge.”
Earlier this month, DraftKings announced it would impose an additional fee in New York, Pennsylvania, Vermont and Illinois, all of which tax DraftKings’ gambling revenue at over 20%.
The aim of the fee was to offset the revenue losses these states suffered due to higher taxes.
Ohio’s sports betting tax is exactly 20%, the same as Massachusetts. Sports bettors and those who closely follow the industry thought that if the fees worked well in other states, Ohio could have fees in the future as well.
There was also the open question of whether other sports betting companies would charge fees, but according to Sports Betting Dime, cleveland.com’s partner for sports betting coverage, the answer so far has been no.
FanDuel, the country’s two most-used sports betting apps alongside DraftKings, said it has no plans to impose a fee in high-tax states, but it will give away less advertising money in those states.
Penn Entertainment, which operates the ESPN Bet app, also said there are no plans to implement a fee, but CEO Jay Snowden said they would monitor how DraftKings’ plan plays out.
“Expect us to be observers,” Snowden said on an investor conference call. “A tax hike in early 2025 is not even on our radar. But I hesitate to say never.”
Ohio’s tax rate was originally 10%, but Governor Mike DeWine successfully pushed for an increase to 20% in the state budget, beginning in July 2023.
“The tax rate for online sports betting in New York is 51%, in Pennsylvania it is 36%, and in Vermont it is 31%. In Illinois the tax rate ranges from 20% to 40% depending on the sportsbook’s revenue, but DraftKings would likely pay 40%.
Cleveland.com and The Plain Dealer may earn revenue from sportsbook operators for referring viewers to betting services. Sportsbook operators have no influence over coverage. Terms and conditions can be found on the operator’s website. If you or a loved one has questions and would like to speak to a professional about gambling, call the Ohio Problem Gambling Helpline at 1-800-589-9966 or the National Council on Program Gambling Helpline (NCPG) at 1-800-522-4700 or visit 1800gambler.net for more information. Over 21 and currently in Ohio. Gambling problem? Call 1-800-Gambler.
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