In a bold move that reflects the changing fiscal landscape in the U.S., DraftKings Inc. announced plans to implement surcharges for customers in states with high gambling taxes. The decision comes after Illinois recently raised taxes on sports betting and is seen as a strategic response to protecting the company’s bottom line.

DraftKings announced a significant milestone, marking its first profitable quarter as a public company. It met analysts’ expectations with revenue of $1.1 billion in the second quarter. However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) slightly missed estimates at $128 million, compared to $133.2 million, according to Bloomberg.

Despite mixed financial results, DraftKings raised its 2024 revenue forecast to up to $5.25 billion but cut its adjusted revenue forecast to up to $420 million from its previous estimate of $540 million. The adjustment comes after Illinois raised its tax rate on sports betting to 40% from 15%.

surcharge mechanism and implications

Beginning Jan. 1, 2025, DraftKings will introduce “gaming tax surcharges” on net wins for customers in states with tax rates exceeding 20% and multiple operators. These include New York, Pennsylvania, Vermont, and now Illinois. The surcharges, which will vary from state to state, aim to offset the increased tax burden and are expected to be a nominal percentage of net wins.

“In Illinois, for example, this represents a single-digit percentage of net income a customer would have previously received,” DraftKings explained in a letter to shareholders cited by Sportico. The move is poised to capitalize on new surcharges starting in 2025 to improve the company’s adjusted EBITDA.

The announcement comes at a time when DraftKings is experiencing strong user engagement, bringing its monthly unique payer count to 3.1 million, up sharply from its previous estimate of 2.6 million. The surge is partly attributed to new promotions that exceed expectations for attracting new customers. 바카라사이트

In addition, the sports betting giant has continued to advance its platform by recently integrating its jackpocket online lottery app and announcing plans to buy back shares worth $1 billion. The move demonstrates DraftKings’ aggressive strategy to consolidate its market position despite the volatile tax environment.

As state legislatures continue to adjust their tax systems, companies like DraftKings are looking for innovative ways to maintain profitability and shareholder value. The surcharge reflects a broader trend toward finding sustainable solutions to problems imposed by the state in the online betting and gaming industries as a direct response to this fiscal squeeze.