DraftKings to tax all winning bets in PA VT IL NY starting 1/1/25

[rolltide]

in response to Illinois jumping their gaming tax to 40% (from 15%!!) DraftKings will now tax all winning bets in the four states with the highest gaming tax rates. They announced this ahead of today's Q2 earnings call after posting $1.1B in revenue

The fee/tax on all winning bets will vary by state but expected to be mid-upper single digits and will be posted as a separate line item and deducted directly from your winnings. An example would be winning $100 but only being paid $95 as DK takes $5 to help cover their state tax owed.

Will all books follow or will players run to bet365, fanduel, betMGM, and others?

I'll let you figure out what IL PA NY and VT have in common

DK posted this illustration which is taxing both your original $10 stake and the $10 bet won

 

[Bozzie]

Draft kings is for amateurs and the reviews are horrible ..I got screwed by them but ended up getting back what I was owed after a ton of back and forth.
Never again.


Leave a review here...I did.

DraftKings is rated "Bad" with 1.2 / 5 on Trustpilot

Do you agree with DraftKings's TrustScore? Voice your opinion today and hear what 532 customers have already said.

www.trustpilot.com

 

[rolltide]

well DK has the largest % handle in the country (38% for Q2) so if they don't lose revenue by enacting a win tax in the 3 largest population states they operate in then expect the other books to follow

that's the point

 

[exploited17]

Almost like making point spread bets -120 instead of 100.
Legal gambling is legal stealing.
If you are allowed to turn winning bettors away and now tax whichever ones do happen to win all while taking as much from losers as you can ....what is that? But the government gets a share so it is okay.

 

[Willie99]

I guess offshore will be making a comeback, at least in some states

Truthfully, I'm not following the DraftKings "tax" position. I understand "withholdings", which you can technically get credit for when you file your tax return. But I don't think DraftKings pays any tax on their clients' winnings, that's not their profits.

Guess I'll have to do a little reading on the subject.

 

[skoda]

I think it’s been common practice when filing taxes all gambling winnings are taxable. DK is a twist on paying when cashing ticket? This looks like Social Security taxed on weekly earnings then again when you collect… Willie will stop by

 

[Greenbacks]

Jump ship to FanDuel

 

[cubbybear1515]

Jump ship to FanDuel

All the legalized books will do the same eventually. Offshore and locals are the answer I guess

 

[skoda]

On deck..... if this plays out for DK, State Lotteries will follow.... San Franciso will give the homeless $100 a week with their proceeds....

 

[JackStraw77]

The states are so greedy. They realize the books are a cash cow so they keep increasing the taxes so the legislature in the state can fund their pet projects to stay in office.

 

[Willie99]

Very odd

I would expect any company would have to pay federal and state income taxes are their profits, that's to be expected. However, IL 40% and NY 51% and PA 36% tax companies like DraftKings more on their gambling winnings. That's just bizarre, those are additional user fees and DK, right wrong or indiffernt, is looking to pass the costs on.

I blame politicians and the states for their insatiable appetites. They can't cut costs, they're always taking taking taking. It's the primary reason I despise politicians so much.

More reason to return to offshore options.

 

[Willie99]

BTW: I have been using DK for a couple of years now. Signed up with them because one of my client's is a DK rep and throws me bones. They're also associated with Foxwoods. The two other legal state options are associated with Mohegan Sun or the state itself, and I'm a Foxwoods guy now

I don't like the 10% juice, but I have no problem at all funding (which has been my offshore issue) or getting paid. Usually have my money next day at the latest. Last time I was offshore it was still a song and dance show. Maybe that's changed with Bitcoin, but I don't do Bitcoin

So I like DK. But if they add any surcharges in CT, I will look hard for other options

 

[rolltide]

more info from their earnings call yesterday from playPA, https://www.playpennsylvania.com/draftkings-taxing-sports-bettors-winnings/

“We are planning to implement a gaming tax surcharge on a customer’s net winnings in any state with a tax rate above 20% that has multiple sports betting operators. The surcharge will be fairly nominal to the customer.

“We plan to implement the surcharge in the four states that have multiple sports betting operators and tax rates above 20% starting January 1, 2025. DraftKings will still absorb taxes up to 20%, so customers will only be impacted above this level.”

The way the tax will work is DraftKings will pay the gambling tax up to 20% and the winning bettor will pay the taxes above that rate in states with a tax rate greater than 20%. In Pennsylvania, sports betting is taxed at 36%. That means winning sports bettors will be on the hook for a surcharge of 16% if they bet with DraftKings.

(this is far different from the "mid single digits" proposed in the leadup to the earnings call)

 

[skoda]

sudden thought... tracks already take 15% out of pool

 

[rolltide]

VSIN discussed this and said it's DraftKings' way of dropping their larger winning bettors but keeping the recreational $10-20 bettor that won't care about $0.50 here and here when they're already loading up on same game parlays and -115/-120 prop bets. Could also be trying to force these states to tax sports and fantasy bets differently from casinos since the vast majority of the money they make is with onsite slot machines or online casino. While IL just enacted the higher tax DraftKings went into NY and PA knowing their rates were 51% and 36%.

Again, the issue isn't specifically about DraftKings but they're the book that takes the largest handle so everyone else might follow just to keep their margins. I believe Q2 was the first quarter DK ever posted a profit

 

[TheComputerGroup]

This sucks.....has DK announced how much the tax will be? Im assuming all contests winners will be taxed the extra fee as well?

 

[slapshot]

This sucks.....has DK announced how much the tax will be? Im assuming all contests winners will be taxed the extra fee as well?

The way the tax will work is DraftKings will pay the gambling tax up to 20% and the winning bettor will pay the taxes above that rate in states with a tax rate greater than 20%. In Pennsylvania, sports betting is taxed at 36%. That means winning sports bettors will be on the hook for a surcharge of 16% if they bet with DraftKings.

That’s what 31% in NY

 

[exploited17]

A business is basically getting guaranteed profit because the state can make money off it. lol

 

[rolltide]

This sucks.....has DK announced how much the tax will be? Im assuming all contests winners will be taxed the extra fee as well?

might know more on 8/13 when DK's parent company releases their earnings. The article at PlayPA suggests DK refuses to pay any state more than 20% tax on their revenue that that customers in >20% states are on the hook for the difference.

https://www.playpennsylvania.com/draftkings-taxing-sports-bettors-winnings/

from the article:

DraftKings will pay taxes up to 20% and the winning bettor is on the hook for the rest​

The way the tax will work is DraftKings will pay the gambling tax up to 20% and the winning bettor will pay the taxes above that rate in states with a tax rate greater than 20%. In Pennsylvania, sports betting is taxed at 36%. That means winning sports bettors will be on the hook for a surcharge of 16% if they bet with DraftKings.

“We definitely thought through a lot of different ways of doing it,” Robbins said. “And… some better idea comes along and we’re open to it. I think the important thing is that if you look at the way it’s typically done in other industries — whether it be hotel taxes or even the sales tax that you pay when you buy something at the store, taxes you know you name it — it’s typically line-itemed out separately, and usually 100% passed along to the consumer.

“In this case, we’re obviously subsidizing a chunk of it. We just thought that was most in line with how it’s typically done versus trying to obfuscate it, which isn’t consistent with our commitment to be transparent to our customers and be very customer-friendly.

“I know there’s maybe benefit to hiding it because maybe people don’t notice, but I think over the long term, customers appreciate transparency and even if they don’t love that their state implemented a high tax and some of that is being passed along, I think they prefer that to not knowing if it was buried in the pricing or something else.”

For now, it’s full steam ahead on the DK tax​

Robins said he doesn’t see a reason DraftKings won’t go ahead with the plan, but DK will listen to customer feedback prior to launching the surcharge in January.

 

[TheComputerGroup]

The way the tax will work is DraftKings will pay the gambling tax up to 20% and the winning bettor will pay the taxes above that rate in states with a tax rate greater than 20%. In Pennsylvania, sports betting is taxed at 36%. That means winning sports bettors will be on the hook for a surcharge of 16% if they bet with DraftKings.

That’s what 31% in NY

If having to pay a flat tax of 16% of every winning ticket is the norm come Jan, Decemeber will be the last month for a lot of big money bettors.