DraftKing Proposed Surcharge for Gamblers Proving to be an Epic Fail Already

It's not even implemented but DraftKings notice to investors that it intends to impose a surcharge on gamblers in states where they are required to pay a 20% or higher tax has gone over like a fart in church.

These states include: Illinois, New York, Pennsylvania and Vermont.

Some customers won't realize it.  Others will.

DraftKings insists the surcharge will be nominal, as much as a mid single digit percentage.  So let's use 5% as an example. 

If someone in one of these four states happens to win $5000, not only will they likely end up having their limits cut, they'll be out $250.  This is before they have to pay taxes on these winnings.  Draftkings reports them to the IRS.

Sam McQuillan of Legal Sports Report provides an example using a smaller payout of $20 that was presented by DraftKings to its investors.

This is what the DraftKings surcharge might look like beginning January 2025.

Will be applied to net winnings in Illinois, New York, Pennsylvania and Vermont to lower DraftKings’ effective tax to 20% in those states. pic.twitter.com/DSbafHdowc

— Sam McQuillan (@sam_mcquill) August 1, 2024

DraftKings, for now at least, appears to be the only gambling company opting for the surcharge. Caesars has already confirmed they will not be doing so.

Responses to the graphic ranged from "F*** that!" to "What the FUCK is this?!?"

Polymarket even chimed in: "Bookies are making winning illegal".

Grantman added: "Absolutely appalling, gray market sites making more and more sense."

Chris Skiria tweeted: "Then DK will lose my business. Yeah, NYS has a 51% tax rate but they make it up in sheer volume."

Shale tweeted: "Bad enough one losses a bet.   Now if you win a bet, you still lose. Where is the rebate for your losses?!?"

Consider this:  Do you tip an extra 2%, 3%, 4%, 5% when you dine out? Imagine a restaurant tacking on that added 5% to your bill after you've tipped the server.

And don't think for a second DraftKings will only apply this to states with the 20% or higher tax rate.  If they can get away with it, they'll implement in all states.  Once the competition sees this, they'll do the same.  Just look at what happened with the airline industry and those temporary checked baggage fees.

By  Nagesh Rath Born in Punjab, India, Nagesh has been writing for the Gambling911.com website since 2019.  He mostly covers the more controversial stories impacting the world of gambling, specializing in poker. Nagesh's favorite sport is cricket.  This beat reporter operates from our Miami Beach base where he resides with his wonderful wife Ravjeer and three daughters.