Flutter CEO, Peter Jackson, said on the company’s second-quarter earnings call late Tuesday that FanDuel had “no plans to introduce a surcharge for winners.”
FanDuel’s chief rival, DraftKings, had said it would impose a surcharge on winning bettors in Pennsylvania beginning in January of 2025. But, to date, no other operator has announced it will follow suit and add a surcharge on winnings.
Less than an hour after Flutter’s call ended, after the company was clear it would not follow DraftKings’ lead, DraftKings released the following statement:
“We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge. We are always committed to delivering the best value in the industry to our loyal customers.”
DraftKings had announced a surcharge on winning bettors in states with tax rates at or above 20%, including Pennsylvania, New York, Illinois and Vermont.
No operator to impose surcharge in PA
DraftKings said it was trying to offset the high tax rates in the aforementioned states. New York and Pennsylvania tax operators at 51% and 36%, respectively, while Vermont’s is 20%. Illinois raised its flat rate of 15% up to a new structure that requires DraftKings and FanDuel to pay up to 40%.
BetRivers quickly released a statement saying it would not follow DraftKings’ lead.
Then, PENN Entertainment CEO Jay Snowden said last week it was monitoring the surcharge issue, but it was a strategy that, for the time being, was “not even on our radar.”
Had FanDuel opted to impose a surcharge in some states, it’s possible DraftKings would have kept its plan in place. However, Jackson explained why FanDuel did not have the same strategy.
“We often find as well that smaller players may also have to increase their prices which leads to us capturing more share which provides an offset for us,” Jackson said.
“And, so, we think that the moderating levels of generosity are reducing local marketing is the best customer option and we have no plans to introduce a surcharge for winners.”
Bottom line: that’s good for bettors. The two most powerful operators in the Keystone State, FanDuel Sportsbook PA and DraftKings Sportsbook PA, will not be putting a surcharge on winning bets.
Stock prices up for both FanDuel and DraftKings
The surcharge topic had caused a huge stir nationally, mostly because nobody has attempted it before.
DraftKings announced the move on Aug. 1 as the stock price reached as high as $36.95 on July 31. After the news, it dipped as low as $29.85 on Aug. 12. The price is down 20.78% over the last month.
Interestingly enough, the price immediately opened at $33.26 on Wednesday. However, it then quickly dropped to $31.15.
On the other hand, Flutter’s stock price has skyrocketed. The price on Tuesday at 4 p.m. sat at $191.40 and jumped to $209.56 at 4.30 p.m. It did get as high as $214.80 on Wednesday morning, but has since dropped to $209.19.
While Flutter didn’t go through with a surcharge, it’s business performed extremely well in Q2 2024, which includes year-over-year increases in revenue and net income of 20% and 364%, respectively, according to Q2 2024 press release.
Flutter also raised full year revenue guidance by 3% in the US, which translates to $6.2 billion.
Despite the high tax rates in some states, it’s business as usual for FanDuel and DraftKings.
