DraftKings to Begin Taxing Winning Bets in Some States

DraftKings has announced plans to introduce a gaming surcharge on winning bets in states with high sports betting tax rates, aiming to enhance profitability. The surcharge will take effect next year in states where the tax rate exceeds 20%, such as New York and New Hampshire, which impose a staggering 51% tax on sports betting operators. In a letter to shareholders, CEO Jason Robins indicated that the surcharge would be nominal for customers, marking DraftKings as the first U.S. operator to levy a tax on bettors' winnings. Robins emphasized that the new surcharge is not included in the company's financial guidance. DraftKings has raised its revenue forecast to between $5.05 billion and $5.25 billion, up from a previous estimate of $4.80 billion to $5 billion. However, the company has adjusted its 2024 adjusted EBITDA guidance downward to a range of $340 million to $420 million, compared to earlier expectations of $460 million to $540 million. In a notable financial turnaround, DraftKings reported a net income of $63.8 million for the second quarter, a significant improvement from a net loss of $77.3 million during the same period last year. Robins expressed confidence that customer acquisition and operational performance would mitigate the impact of the Illinois tax increase, projecting adjusted EBITDA between $900 million and $1 billion for the upcoming year. Additionally, DraftKings has launched a $1 billion share repurchase program, further signaling its commitment to enhancing shareholder value as it continues to expand its mobile sports betting operations across 25 states and Washington, D.C.