DraftKings CEO Jason Robins is ready to contest another sports betting tax hike

This past Thursday, DraftKings CEO Jason Robins spoke at the Bank of America’s Gaming and Lodging Conference. Robins noted how industry operators have looked back at past mistakes to have a better plan moving forward. Earlier this year, Illinois instituted a significant tax hike and it was not received well within the industry. DraftKings is part of the Sports Betting Alliance along with FanDuel, BetMGM, and Fanatics. They came together to push back against the increased tax rate in Illinois planned to put in place. Jason Robins had this to say late last week.

“All of us sort of got together and said, ‘OK, this didn’t go the way we thought, let’s take a look at why, let’s figure out how we can do better next time,” said Robins. “So I think our playbook for combating these types of things is going to be significantly better this coming legislative season.”

What did the Sports Betting Alliance do to try and prevent the tax hike in Illinois?

Ahead of Illinois introducing its new tax rate, the Sports Betting Alliance was trying to prevent it from happening. They urged residents in Illinois to voice their frustrations and reach out to local lawmakers. Those efforts were not enough to stop Illinois from changing the tax rate. This new tax rate started in July and their highest rate is now 40%. Previously, online operators had a flat rate of 15%. As one of the top two sportsbooks in the United States, DraftKings will likely fall into the 40% tax rate and CEO Jason Robins is not pleased. DraftKings noted they expect the tax hike to cost them $50 million in adjusted earnings in 2024. That type of dramatic tax rate change is why the Sports Betting Alliance came together to prevent another increase.

In response to the increased tax rate in Illinois, DraftKings proposed a “gaming tax surcharge” on winning customers in higher-tax states. That would include Illinois. Once that news was made public, it received major backlash. DraftKings had to drop their plans for a “gaming tax surcharge” after other sportsbooks did not plan to follow. In 2024, DraftKings has only had to contend with three of the 25 jurisdictions where they have legal sports betting.