RSI rules out following DraftKings with gaming tax surcharge
BetRivers parent company says focus is on “customer satisfaction,” becoming the first operator to publicly rule out introducing the controversial fee
Rush Street Interactive (RSI) has insisted it will not follow the lead of DraftKings in implementing gaming tax surcharges as part of the operator’s commitment to “customer-centric policies.”
The Chicago-based operator released a brief press release today, August 5, in which management explained it would not be adding a customer surcharge to its Kambi-powered offering.
The BetRivers, PlaySugarhouse, and RushBet operator said that its decision not to put a surcharge in place had reaffirmed “its dedication to providing exceptional value to its players.”
RSI CEO Richard Schwartz said: “As we put our customers first, it was an easy decision for us.
“RSI remains committed to maintaining its leadership position in the industry by continuously prioritizing the needs and preferences of its players.
“We believe that RSI’s focus on customer satisfaction, coupled with its innovative rewards and loyalty programs, sets a benchmark for excellence in the online gaming industry.”
The statement comes after DraftKings revealed plans last week to place a surcharge on winning bets in New York, Pennsylvania, Illinois, and Vermont – all jurisdictions with a tax rate north of 20% on gross gambling revenue (GGR).
The measure, which will come into effect from January 1, 2025, will be introduced in high-tax markets to give DraftKings an effective tax rate of 20%.
New York’s tax rate on GGR sits at 51%, while Pennsylvania and Vermont tax online sportsbooks at 36% and 31%, respectively.
Illinois introduced a progressive framework last month, between 20% and 40% based on GGR, usurping the previous 15% flat rate.
RSI is live in New York, Pennsylvania, and Illinois – although only DraftKings and FanDuel are in the top 40% rate of GGR tax in the Prairie State, based on historical performance.
DraftKings has claimed the surcharge will be “fairly nominal”, thought to be in the 3% to 5% range.
During an analyst call following DraftKings’ Q2 earnings report publication, CEO Jason Robins compared the surcharge to hotel or retail store taxes as he revealed no A/B testing had been completed.
Robins said: “If you look at the way it’s done in other industries, whether it be hotel taxes or even sales taxes when you buy something at the store, taxis, you name it – it’s typically 100% passed along to the consumer. We’re obviously subsidising a chunk of it.
“From hotels to taxis, [they] all have taxes in various states, and they get charged to the consumer. People may gripe about it, but I don’t really see behaviour change because of it.”
Following the announcement, analyst Carlo Santarelli of Deutsche Bank said in a note that DraftKings was “almost certain” to lose market share in the four states if the company proceeds with this plan. He also suggested the larger and sophisticated customers would “depart almost immediately.”