In the advent of rising taxes and market conditions deemed deleterious to the nation’s two largest mobile sportsbooks, FanDuel and DraftKings, the latter has decided to form the DraftKings Inc. Political Action Committee to combat the prevailing regulatory conditions.
DraftKings Flexes Politically
DraftKings has come under legislative scrutiny for several different reasons. First and foremost, it has been the victim of increased tax rates due to its sheer volume, surpassed only by FanDuel. Both bookmakers control well over 70% of the U.S. mobile wagering market. DraftKings has decided to form a political action committee (PAC) to have its voice heard.
“We have established this PAC to support state and federal candidates and organizations who have shown an interest in issues affecting our business,” a company spokesperson said.
The DraftKings PAC will be led by Lauren Pfingstag Vahey, the company’s Senior Federal Affairs Director, and Senior Vice President Griffin Finan. Both DraftKings’ executives will navigate the political waters and be the voice that the company has been missing during the legislative process.
Concerns Over Tax Policy
“DraftKings’ ultimate goal is to build the best, most trusted, and most customer-centric destination for our players. The recent tax increase in Illinois makes it harder to provide the best service to our players while it simultaneously incentivizes more players to wager in the unregulated, illegal market,” a spokesperson added.
“Among other things, we are monitoring a range of regulatory, tax, and licensing policies around the country, including the recent tax increase in Illinois. In addition, DraftKings may prioritize issues that impact business operations, including the expansion of the legal, regulated online betting market,” the spokesperson stated.
Passing the Buck
The recent announcement concerning DraftKings’ new PAC is not an outlier. It follows other PACs in the gaming industry, such as PrizePicks PAC, and many casino operators, including MGM Resorts and Caesars Entertainment, that have also created their own PACs.
It would not be surprising if FanDuel followed suit and established a PAC as well, considering their tax brackets have been boosted as well. Both sportsbooks dominate the market and, as such, have been in the crosshairs of legislatures looking to even the playing field.
The most recent blow to DraftKings and FanDuel had everything to do with the increase in taxes from the Illinois legislature that not only raised taxes on the most popular sportsbooks last year, hiking their taxes from 15% to 40%, but this year Illinois announced a transaction tax that implements a 25-cent fee on under 20 million transactions and 50 cents on transactions that are more than 20 million.
FanDuel immediately announced it would be passing a 50-cent per transaction fee on to its users, and DraftKings announced the same within days. Both leading mobile sportsbooks also stated they would drop the fee if Illinois did the same. Now they have shifted the onus to the legislature and have brought the tax home to the bettors.
