DraftKings Reverses Surcharge Decision Amid Backlash
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00:00Jim, let's dive right into DraftKings.
00:05I mean, I guess it's better to write a wrong, but it was really hard to fathom how DraftKings
00:11could survive even taking, you know, 0.1%, 1% out of SportsBetter's money when they win
00:18because betters have a choice to go other places and in reading the tea leaves, did
00:22they just know that FanDuel was going to come out and say, hey, we ain't doing this.
00:25We already saw some other companies doing it too.
00:28I mean, the whole thing is just very bizarre to make, so by the way, to have somebody say
00:32that publicly as opposed to a rumor, we could do rumors all day, but to make that declaration,
00:38you know, not the best look, I would say, just to be honest today.
00:42Yeah, and it was, you know, came after FanDuel released their quarterly earnings earlier
00:50in the afternoon yesterday and then DraftKings came out about two hours later and walked
00:55back that surcharge, which, you know, got a lot of time and attention over the last,
01:03you know, 10 to 12 days since DraftKings announced that during its quarterly earnings call about
01:11a week and a half or so ago.
01:13And you know, I think when you look at it, the strategy for them, at least on the surface
01:19when they announced it, was in an attempt to combat the high tax rates that they have
01:27to pay in a handful of states.
01:29And, you know, perhaps deservedly so, they received a lot of flack for it on social media.
01:35And, you know, interestingly enough, Craig, I come from a tax communications world prior
01:42to my role here at Legal Sports Report.
01:44So, the fascination for me, not only in the surcharge itself, but also in the communication
01:51strategy around charging your customers a little bit more, I thought was rather interesting.
01:57And like you said, they did walk that back yesterday and, you know, FanDuel prior to
02:05DraftKings walking back this surcharge, like I said, they released their quarterly earnings.
02:11They said that they were not going to be placing a surcharge on their customers.
02:15A couple other sportsbooks came out during their quarterly earnings call in the last
02:20week, week and a half, also saying that they weren't going to be attaching a surcharge
02:26to winning bets on their customers.
02:28So, it seemed like DraftKings was left on a little bit of an island and, you know, they
02:34said in their statement, listening to feedback from their customers, that's, you know, probably
02:40in part, a large part, very true.
02:44As I said, there was a lot of discourse on social media about it.
02:48But also, too, you have to think that them being the only sportsbook, major sportsbook
02:55applying this surcharge, or at least talking about applying this surcharge because they
03:00said it wasn't going to start until January.
03:03You have to think them being on this island all by themselves, coupled with the general
03:11discontent from customers around the potential for this to be enacted in a couple of high
03:17tax states, certainly led to that decision yesterday for them to forego this surcharge
03:25on winning bettors for DraftKings.