During its latest earnings call, DraftKings revealed that starting January 1, 2025, it will impose a surcharge on winning bets in Pennsylvania, New York, Illinois, and Vermont. This controversial decision is a response to the high tax rates in these states, which are at or exceed 20%.
New Jersey Bettors Are in the Clear—For Now
Fortunately for New Jersey bettors, the state’s current tax rate of 13% keeps them exempt from this surcharge. As such, customers using DraftKings Sportsbook NJ can continue placing bets without any changes to their app or potential winnings. The absence of a surcharge means that Garden State bettors can breathe easy, at least for the time being.
DraftKings made it clear that New Jersey is not included in the list of surcharge-affected states, as its tax rate remains competitive among those with legal sports betting. Bettors in New Jersey should be aware that, for now, their winnings remain intact.
Cross-Border Bettors Face Surcharges
While New Jersey remains unaffected, bettors crossing the state lines into Pennsylvania or New York will encounter the new surcharge on their winnings. Both states have some of the highest tax rates in the nation, with New York at a staggering 51% and Pennsylvania at 36%. DraftKings CEO Jason Robins emphasized the necessity of this surcharge during the Q2 2024 earnings call, stating, “Passing the tax onto bettors is necessary for our ability to maintain a reasonable margin and compete with the illegal market.”
Despite calling the surcharge “nominal,” it is still unwelcome news for bettors in these states, who will see deductions directly reflected on their bet slips before placing wagers. If avoiding the tax is important, New Jersey remains the preferable option for placing bets.
Potential Tax Increases on the Horizon
There has been ongoing discussion regarding a potential tax increase in New Jersey. State Senator John McKeon proposed raising tax rates for sportsbooks and online casinos to 30% last March, although it did not make it into the 2025 fiscal budget. However, McKeon remains determined to push for this increase, indicating that discussions will continue in the fall.
“I’m disappointed that we didn’t get it done in time to be helpful this budget cycle,” McKeon told PlayUSA. “But there’s no doubt that we will make some changes to the online gaming tax rate in our state.”
The recent decision by DraftKings to implement the surcharge follows Illinois’ drastic tax increase from 15% to 40% for leading operators like DraftKings and FanDuel. Robins hopes that this development will cause other states to reconsider similar moves.
“I do think this is something that may make some states reconsider because now they may be hearing more from their citizens that they don’t like it,” he stated.
For now, New Jersey bettors can enjoy the peace of mind that comes with their current tax rate. However, should changes occur in the future, they may need to prepare for potential surcharges as well.
Source : https://www.playnj.com/news/have-no-fear-draftkings-surcharge-does-not-apply-nj-sports-betting-yet/82132/
