DraftKings Drops Customer Tax Plan as FanDuel Impresses Investors

Flutter Entertainment reported impressive second-quarter earnings this week, leading to an 8% increase in its stock price as investors reacted positively to the performance of its FanDuel betting platform. The platform has been successfully capturing market share and significantly increasing revenue, even in states with established sports betting and online gaming markets. A key highlight from the earnings report was FanDuel's decision not to impose a surcharge in response to a recent tax hike in Illinois, a move that contrasts with rival DraftKings, which announced a surcharge for consumers in high-tax states. The Illinois tax hike, which imposes a 40% tax rate on gambling companies with the largest adjusted gross revenue, has prompted discussions among operators. DraftKings' stock rose by over 2% following its announcement of the surcharge, while Flutter's decision to forgo a similar approach was met with approval from gaming analysts. FanDuel's management emphasized their commitment to customer feedback, stating that the surcharge would have affected winnings in states with multiple operators facing tax rates exceeding 20%. FanDuel currently holds a commanding 47% market share in U.S. sports betting based on gross gaming revenue and is also leading in the iGaming sector with a 25% share. The American Gaming Association reported that operators generated $677 million in iGaming revenue from just seven states in the first five months of 2024. A new report suggests that if all states with land-based casinos or sports betting allowed iGaming, the annual gross gaming revenue could reach $48 billion.