FanDuel Deals Blow to DraftKings, Says No to Surcharge
FanDuel Deals Blow to DraftKings, Says No to Surcharge
***UPDATE: Shortly after Flutter announced it will not impose a surcharge, DraftKings reversed its course and decided not to tax winning sports bets in Illinois, New York, Pennsylvania, and Vermont. This change comes as a response to customer feedback.***
In a significant move against its rival, DraftKings (NASDAQ: DKNG), FanDuel’s parent company, Flutter Entertainment (NYSE: FLUT), has confirmed its intention not to implement surcharges on winning sports bets in certain high-tax states.

Flutter’s announcement comes just twelve days after DraftKings proposed a small surcharge for winning sports wagers in Illinois, New York, Pennsylvania, and Vermont, set to begin on January 1, 2025. Flutter’s CEO, Peter Jackson, however, made it clear that they will not adopt a similar strategy.
“We often find that smaller players may have to increase their prices, which allows us to capture more market share, serving as an offset for us,” Jackson stated during an analyst conference call. “We believe that moderating local marketing strategies is the best option for our customers, and thus we will not introduce a surcharge on winners.”
Investor sentiment reacted positively to this news, leading to a rise in Flutter’s shares by 10% after hours, while DraftKings experienced a drop of 4%. As it stands, FanDuel’s parent company has appreciated by 6.92% year-to-date, compared to DraftKings’ decline of 10.81%.
Welcome to Surcharge Island, DraftKings
Following DraftKings’ announcement regarding the surcharge on August 1, speculation circulated among analysts and investors about whether FanDuel would follow suit. Contrary to this belief, it seems that optimism was misplaced.
While such a surcharge could theoretically bolster DraftKings’ revenue streams, it bears the risk of tarnishing its public image, particularly since no other companies have echoed similar plans.
Flutter’s decision not to levy surcharges aligns it with other operators like Rush Street Interactive (NYSE: RSI) and BetMGM, both of which have explicitly stated they will refrain from imposing taxes on winning bets in high-tax regions.
Meanwhile, Penn Entertainment (NASDAQ: PENN), the owner of ESPN Bet, is currently tracking the surcharge situation but has neither endorsed nor criticized it as of now.
Flutter Challenges Illinois’ Tax Structure
Peter Jackson has indicated that the majority of regions where FanDuel operates maintain reasonable taxation methods for regulated sports betting. However, he expressed dissatisfaction with the recently enacted graduated tax system in Illinois.
As of July, Illinois has instituted a tax scheme mandating that high-revenue sportsbook operators, such as DraftKings and FanDuel, pay considerably higher taxes than their smaller counterparts. As a direct consequence, their effective tax rates in Illinois have more than doubled.
Jackson commented: “Imposing a graduated tax that penalizes individuals who have made significant investments to expand their businesses is unjust. This system could drive customers towards offshore competitors, or even onshore operators offering unregulated and untaxed betting options disguised as sweepstakes.”
Given the current landscape and regulatory climate, it’s crucial for sportsbooks to navigate these changes carefully, weighing the potential for increased revenue against the possible ramifications for customer loyalty and brand reputation.
Key Takeaways
- FanDuel’s decision counters DraftKings’ surcharge, no additional tax levies to be applied.
- Flutter’s stock rises while DraftKings sees a decline after the announcements.
- Flutter aligns with other operators in rejecting the surcharge scheme.
- The Illinois tax structure poses challenges for high-revenue operators.
In conclusion, Flutter’s announcement against the surcharge highlights significant strategic differences in the competitive landscape of sports betting. Understanding the implications of these financial decisions is crucial for industry stakeholders, investors, and players alike. As this issue continues to unfold, it will be interesting to observe how both companies adapt to the evolving market.


















