FanDuel Reaffirms No Plans for Betting Surcharge Amid DraftKings Reversal

DraftKings’ recent announcement to implement such a surcharge—a plan that has since been rescinded due to widespread criticism.

FanDuel’s Firm Stance on Surcharges

During the earnings call, Jackson emphasized, “We have no plans to introduce a surcharge for winners.” This statement directly addressed concerns raised by DraftKings’ earlier decision to impose a surcharge on winning bets as a way to offset revenue losses due to high taxes in states like Illinois and New York. DraftKings initially planned to implement a 3-5% surcharge on winning bets in states with tax rates exceeding 20% on gross gaming revenue (GGR), including New York, Pennsylvania, Vermont, and Illinois.

FanDuel’s position on the issue was a significant topic of interest leading into the call. Many speculated whether FanDuel would follow DraftKings’ lead or take a different approach. Jackson’s clear dismissal of the surcharge notion was quickly followed by DraftKings retracting its surcharge plans, citing customer as the reason for the reversal. According to a post on social media, DraftKings stated, “We always listen to our customers and after hearing their , we have decided not to move forward with the gaming tax surcharge.”

Industry Reactions and Comparisons

FanDuel’s refusal to adopt a surcharge reflects a broader industry sentiment. Other operators, such as Rush Street Interactive, had already opposed the idea of ing on the cost to customers. Rush Street was notably firm in its stance, announcing that it would never impose such a surcharge. This sentiment was echoed by Penn Entertainment, though with less rigidity than Rush Street’s declaration.

DraftKings’ CEO, Jason Robins, initially appeared confident that the surcharge would set a precedent that others might follow. However, the swift backlash from customers, industry experts, and even financial analysts led to a rapid reassessment. Regulus Partners, a financial advisory firm, criticized the move harshly, suggesting that DraftKings’ board should publicly abandon the policy, which they ultimately did.

FanDuel’s Strategic Success and Future Outlook

The earnings call was not solely focused on the surcharge debate. Jackson and his team reported strong performance in their core markets, attributing success to FanDuel’s customer acquisition strategies. Jackson described the quarter as “a very strong quarter for the group and ahead of expectations,” noting that FanDuel had outperformed in its primary markets.

Jackson also highlighted improvements in Flutter’s NBA, WNBA, and MLB offerings, as well as the launch of Italy’s first-ever same-game-parlay bet, which has resulted in record market share in the country. The company’s expansion into international markets was further underscored by new CFO Rob Coldrake, who noted growth in rugby wagering in Australia, despite a decline in the horse racing sector.

Looking ahead, Coldrake cautioned investors to expect a modest negative return on investment in the third quarter. However, he was optimistic about a revenue surge in the final quarter of 2024, ed by an additional $20 million allocated to marketing efforts. The Euro 2024 soccer tournaments were cited as a significant driver of Flutter’s recent success, with heightened activity and favorable outcomes for the bookmaker.

Expansion and Future Projects

On the international front, Flutter continues to expand its iGaming presence, particularly in the United Kingdom, where all four of its brands have shown year-over-year growth. Jackson also mentioned that Flutter is rolling out a poker platform in Italy and seeing positive signs in the U.S. market through its subsidiary, Poker Stars.

Although Jackson did not address rumors regarding a potential acquisition of ESPN Bet or interest in the Diamond Sports affiliations shed by Bally’s Corp., he emphasized the importance of strong media ties in the U.S. market. Coldrake, on the other hand, confirmed Flutter’s ongoing push into Brazil, a market that has been a target since 2018.

Source:

“FanDuel Rules Out Bet Surcharges.”, cdcgaming.com, August 13, 2024.