If gambling operators could have set a line on the first question asked at Tuesday's Flutter quarterly earnings call, one choice likely would have been the heavy favorite.
As expected, an analyst opened the question-and-answer section by pressing Flutter CEO Peter Jackson on whether FanDuel planned to follow DraftKings’ lead and institute a proposed surcharge on select winning bets. On Aug. 1, DraftKings unveiled a bold proposal to impose a small fee on bettor wins in four high-tax states. In response, Jackson emphasized that Flutter had a good deal of “patent recognition” internationally in jurisdictions with elevated tax rates. Historically, Flutter replied by “moderating generosity” in those areas through a reduction in levels of local marketing and promotions.
As it relates to FanDuel, Jackson noted that the company planned on drawing from the same playbook, insisting it wouldn’t impose the surcharge. By 6:04 p.m., less than 90 minutes later, DraftKings abruptly pulled the surcharge proposal, which unleashed a firestorm on social media. As of Thursday morning, the post from DraftKings received approximately 2.5 million hits.
When the dust settled, the industry shifted its focus to the immediate impact on customer relations, pricing, and the tax environment for commercial sportsbooks around the nation. With elevated tax rates, the country’s top sports betting operators will likely be challenged to maintain reasonable margins. As operators look to offset higher tax burdens, there may be an adverse effect for bettors in the form of unfavorable prices.