DraftKings is calling off its controversial plan to add a surcharge to winning bets in select states with high taxes on sports betting operators. It was a plan that likely looked good on paper but was a total flop with players. More importantly, to DraftKings, other sports betting operators failed to follow DraftKings’ lead when it came to gouging customers.
Earlier this month DraftKings announced its plan to add a three to five percent surcharge on winning bets in New York, Pennsylvania, Vermont and Illinois. These states were selected for the fee because their tax on operators, in all cases, exceeds 20 percent.
Not surprisingly, the idea of shouldering DraftKings’ tax burden did not sit well with players. More importantly, for DraftKings, other operators balked at the idea of gouging winning players with a sneaky winners’ fee. Regulus Partners lambasted the move in comments reported on SBC Americas saying, “To suggest this is brave is a euphemism, in our view, and the brand is already likely to be suffering damage. There is only one sensible thing for the DraftKings board to do now – publicly dump the policy, say sorry, and move on, while privately inquiring how on earth such a self-defeating policy could be publicly announced.”
Reactions like that led the company to make a very public u-turn on the matter saying, “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,” in a statement on X.
It turns out that while high taxes are generally unpopular with operators, shifting that burden to players is actually unpopular with players. And in the highly competitive US sports betting market, players simply have too many options for one operator to go rogue with a hidden vig on their winning plays.