During Flutter’s second-quarter earnings call on Tuesday, CEO Peter Jackson announced that FanDuel has “no plans to introduce a surcharge for winners.” This statement came as a direct response to the increasing chatter surrounding surcharges on winning bets, especially after DraftKings previously indicated it would implement a surcharge in Pennsylvania starting January 2025.

DraftKings Reverses Course After FanDuel’s Decision
Following Flutter’s call, DraftKings quickly reversed its stance on the proposed surcharge. The company released a statement noting, “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 committed to delivering the best value in the industry to our loyal customers.”
DraftKings had initially planned to impose this surcharge on winning bettors in states with high tax rates, including Pennsylvania, New York, Illinois, and Vermont, aiming to counterbalance the burdensome tax landscape. Pennsylvania and New York impose tax rates of 36% and 51%, respectively, while Vermont’s tax stands at 20%. Illinois recently adjusted its tax structure, raising it from a flat rate of 15% to potentially as high as 40%.
In light of DraftKings’ decision, BetRivers quickly affirmed that it would not follow suit. PENN Entertainment CEO Jay Snowden also weighed in, stating that the surcharge issue was “not even on our radar” for the time being, highlighting the cautious approach many operators are taking.
Had FanDuel opted for a surcharge, it might have compelled DraftKings to stick with its original plan. However, Jackson clarified FanDuel’s rationale for not adopting such a strategy, emphasizing that smaller operators may need to increase their prices in response, potentially allowing FanDuel to capture greater market share without imposing a surcharge.
Overall, this decision is favorable for bettors in Pennsylvania, as neither FanDuel nor DraftKings will be adding a surcharge on winning bets.
Market Response and Company Performance
The topic of surcharges sparked significant national interest, given that it has not been attempted before. DraftKings announced its surcharge plan on August 1, coinciding with a stock price peak of $36.95 on July 31. However, following the announcement, its stock price dropped to $29.85 by August 12, reflecting a decline of over 20% in just a month. Following the reversal of its surcharge decision, DraftKings’ stock opened at $33.26 but quickly fell to $31.15.
In contrast, Flutter’s stock has experienced remarkable growth. It soared from $191.40 at 4 p.m. on Tuesday to $209.56 just half an hour later, reaching a high of $214.80 on Wednesday morning before settling at $209.19.
Flutter’s financial performance has been impressive, with Q2 2024 showcasing year-over-year increases in revenue and net income of 20% and a staggering 364%, respectively. The company has also raised its full-year revenue guidance in the U.S. by 3%, now projecting $6.2 billion.
In summary, despite the heavy tax burdens present in some states, FanDuel and DraftKings are moving forward without imposing a surcharge, indicating a continued commitment to their customer base.
Source : https://www.playpennsylvania.com/fanduel-declines-surcharge-draftkings-reverses-course/