The gambling industry was turned upside down last week when DraftKings announced it would surcharge the winnings of bettors in Pennsylvania, New York, Illinois and Vermont. In a statement on Monday morning, Rush Street Interactive (RSI) announced that it would not adopt the same strategy as DraftKings.
DraftKings is essentially asking customers to help pay for taxes in the four states that have a rate at 20% or higher. RSI has already taken a stand against the strategy, in what seemed like a shot at DraftKings, by putting “our customers first.”
RSI has a large presence in the Keystone State, operating two retail casinos along with BetRivers Sportsbook PA and two online casino skins.
RSI’s ‘easy decision’ to not include surcharge
Pennsylvania has one of the largest sports betting tax rates at 36%, which trails New York’s 51%. Those structures, along with Illinois’ new bracketed system, triggered DraftKings to pass some of the tax down to its customers in a controversial move. That means customers of DraftKings Sportsbook PA will see the new tax on winnings beginning Jan. 1, 2025.
RSI CEO, Richard Schwartz, made it clear that won’t be happening in Pennsylvania, or any other state.
“As we put our customers first, it was an easy decision for us,” he said in a press release.
“RSI remains committed to maintaining its leadership position in the industry by continuously prioritizing the needs and preferences of its players. We believe that RSI’s focus on customer satisfaction, coupled with its innovative rewards and loyalty programs, sets a benchmark for excellence in the online gaming industry.”
The press release also mentioned that RSI wants players to feel valued and appreciated. Imposing a tax on a bettors’ winnings certainly doesn’t seem to line up with that sentiment. While RSI didn’t explicitly mention DraftKings, it could be construed as taking a shot at their competitor.
No operators have followed suit, yet
As of now, DraftKings is the only gambling company to have announced a tax on the very customers that make it one of the top operators in the US. CEO Jason Robins said on the call last Friday:
“For us, this is to be competitive with the illegal market and invest properly in product and customer experience in a state that has a very high tax rate. We feel it’s an important step that consumers will ultimately understand and if they feel the product and experience is better they’d rather pay for that rather than somewhere else that maybe doesn’t have a strong product.”
While Robins thought it was a necessary strategy, no other operator has come to that decision, yet. Prominent companies such as BetMGM, Caesars and now BetRivers appear to have no plans of implementing a surcharge.
Flutter and PENN Entertainment have yet to have Q2 2024 earnings calls. It remains to be seen what each company has in mind, as the surcharge topic is sure to come up.
It’s more likely for Flutter, which operates FanDuel, to impose a tax because of Illinois’ rate of 40% for market leaders including FanDuel and DraftKings.
BetRivers Sportsbook showing signs of improvement
It’s no secret that among PA online sportsbooks, FanDuel and DraftKings are at the top of the market. And then there’s everyone else.
However, after a slow start, BetRivers has secured a spot as a top five operator over the last three months, in terms of handle, and has been able to increase market share over that span. Its market share results are as follows year to date:
- January: 4.0%
- February: 3.5%
- March: 3.8%
- April: 4.1%
- May: 4.4%
- June: 4.7%
Over the last three months, BetRivers has finished ahead of Caesars and new operator, Fanatics, which had high hopes when launching back in January.
During its Q2 2024 earnings call last week, RSI credited Pennsylvania’s influence on the company’s strong financial position. RSI certainly has a strong set of products, especially in the Keystone State, and has no plans of pushing a tax onto customers.
