In a decisive move against rival DraftKings, Flutter Entertainment, the parent company of FanDuel, announced today that it will not be implementing any levies on winning sports bets in select high-tax states. The announcement came shortly after DraftKings revealed it would impose a surcharge on winning sports wagers starting January 1, 2025, in Illinois, New York, Pennsylvania, and Vermont. This decision by Flutter CEO Peter Jackson marks a stark contrast to DraftKings’ strategy.
During a conference call, Jackson emphasized that Flutter had no intention of mimicking DraftKings’ surcharge plan. “We often find that smaller players may have to increase their prices, leading us to capture more market share, which offsets our costs,” Jackson explained. “We believe that moderating the reduction of local marketing is the best option for our customers, and we have no plans to introduce a surcharge on winners.”
Investor sentiment was immediately impacted. As of this writing, Flutter shares surged by 10% in after-hours trading, while DraftKings shares fell by 4%. For the year, Flutter’s stock has seen a 6.92% increase, in stark contrast to DraftKings’ 10.81% decline.
Following DraftKings’ August 1 declaration about the surcharge, aimed to bolster 2025 earnings, there was speculation that FanDuel might adopt a similar strategy. However, Jackson’s firm rejection put an end to those theories. Market analysts quickly noted that if one company falters, its competitors are unlikely to follow suit. Therefore, while the surcharge might improve DraftKings’ financials, it risks becoming a public relations debacle, given the lack of support from other major operators.
Flutter’s decision aligns it with other companies like Rush Street Interactive, BetMGM, and Caesars Entertainment, who have openly stated they will not levy winning wagers in high-tax states. Penn Entertainment, the owner of ESPN Bet, has remained neutral on the issue, monitoring the situation without endorsing the surcharge.
Jackson also criticized Illinois’ new graduated tax scheme, which significantly raises tax rates for high-revenue sportsbook operators like DraftKings and FanDuel. Introduced in July, the plan more than doubled the effective tax rate for these companies. “Implementing a graduated tax system that penalizes those who have invested the most in growing their businesses is wrong,” Jackson stated in response to an analyst’s question. “It will drive customers to offshore operators or to onshore operators offering unregulated, untaxed prop parlays under the guise of sweepstakes.”
The news serves as a pivotal moment in the competitive landscape of sports betting, clearly delineating the strategic approaches of two industry giants.
