Digital Wager Wire highlights the most important events impacting the domestic and international sports betting and gaming industry each week throughout the year.
DraftKings & FanDuel Clap Back at Illinois Tax Hike
Illinois raised the tax rate on sportsbooks’ revenues last year from 15% to a tiered structure that saw the least popular sportsbooks pay 20% on annual revenue below $30 million, 25% for revenue up to $50 million, 30% for revenue up to $100 million, 35% for revenue up to $200 million, and 40% for more than $200 million.
If that wasn’t a bitter enough pill to swallow, the Illinois legislature laid down the law yet again by implementing a per-bet fee of 25 cents for under 20 million transactions and 50 cents per bet for transactions over 20 million. Naturally, this caught the attention of the two biggest mobile sportsbooks in the nation, DraftKings and FanDuel.
FanDuel and DraftKings Respond Swiftly
But rather than sit back and send a tersely worded letter to the lawmakers who supported the bill, FanDuel decided to pass the fee along to its customers. Boston-based DraftKings followed suit, and now you have the nation’s dynamic duo of sportsbooks that control approximately 75% of the market making a move of their own and agreeing to rescind the fee if the lawmakers in Illinois do the same.
“Illinois has been an important part of our growth, and we’re proud to have contributed meaningfully to the state through tax revenue, job creation, and a sustained investment in responsible gaming tools and resources,” DraftKings CEO Jason Robins said in a press release. “We are disappointed that Illinois policymakers have chosen to more than triple our tax rate over the past two years, and we are very concerned about what this will do to the legal, regulated industry. Meanwhile, Illinois continues to fuel the rapidly growing illegal industry, which pays no taxes or fees and provides none of the consumer protections that regulated operators offer.”
Sports Betting Alliance Slams the Law
The Sports Betting Alliance, comprised of FanDuel, DraftKings, BetMGM, and Fanatics, called the tax increases “discriminatory, punitive, and constitutionally suspect.” The sports betting industry trade group also issued the following statement:
“For the second consecutive year, the Illinois legislature chose to balance its budget with a crippling tax on legal online sports betting operators and their million-plus Illinois customers, this time with no warning and no consideration of the devastating impact this tax would have on the legal market.”
NCAA Agrees to Pay Former Athletes Billions
The deal had been in the works for nearly a year, but they needed a judge to declare the agreement between the NCAA and three separate lawsuits binding. And last week, Judge Claudia Wilken signed off on a resolution that will end the lawsuits against the NCAA and will pay student athletes $2.8 billion over 10 years. This deal includes athletes from 2016 to the present.
Charlie Baker, the NCAA president and former governor of Massachusetts, has been proactive in negotiating the deal that he hopes will finally put to rest the question of student athletes getting compensation.
Baker believes the correct path to navigate moving forward is one of cooperation between the schools, the governing body, and the athletes.
Baker said, “I think the status quo has created over the years, maybe even over decades, a lack of stability and predictability for just about everybody who’s involved in college sports, at least at the highest level.
“And I think for us, finding a way out of that status quo and creating what I would describe as some predictability—especially for Division I and for the schools—and also a better way, in our view, to support student athletes by establishing this kind of a legal framework that can be monitored and enforced, it basically gives the NCAA and its membership 10 years to pay off the back damages. And also, to some extent, it binds us all together over that 10-year period to work together, to follow through on it,” he said.
