DraftKings plans to tax winning bets in some states to boost profit

From CNBC: 2024-08-02 18:15:57

DraftKings plans to introduce a gaming surcharge on winning bets in states with high sports betting tax rates above 20%. This move aims to boost profits amidst pressure from tax hikes in the industry. The company reported its first profitable quarter, reaching revenue of $1.1 billion in Q2.

DraftKings CEO hopes the new surcharge prompts states to reconsider high tax rates. The nominal surcharge, like 30 cents on a $10 bet, will impact customer experience. Revenue guidance was raised to $5.25 billion for 2021, showing strong growth, but adjusted EBITDA guidance for 2024 was lowered.

Despite concerns about customer response to the surcharge, DraftKings reported a profit of $63.8 million in Q2. Revenue increased by 26%, driven by customer engagement, expansion, and acquisition of Jackpocket. The company anticipates strong performance, projecting $900 million to $1 billion in adjusted EBITDA for next year.

DraftKings operates in 25 states with mobile sports betting and in five states with iGaming. With the expansion of sports wagering across the U.S., the company remains optimistic about future growth opportunities. DraftKings also introduced a $1 billion share repurchase program.



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