Peter Jackson, CEO of Flutter Entertainment has issued a warning regarding the delicate balance states must strike when taxing online sports gambling, emphasizing how excessively high tax rates could push gamblers toward unregulated offshore platforms and push away gamblers who abide by state regulation.
Jackson recently proposed an optimal tax rate of 18% for online sports gambling throughout the US in his discussion with Financial Times, to create an even playing field between states like New Jersey and Illinois/New York/Pennsylvania with more burdensome taxes such as New Jersey/NJ/NY PA etc. His reasoning comes from Laffer Curve principles which suggest there exists an ideal rate which maximizes government revenue without discouraging economic activity.
Jackson advocates for finding an optimal tax level that would protect both sportsbooks and illegal betting activities without hindering either market. By advocating a midpoint position, she hopes to reach that “Goldilocks” point and reach her desired results.
Flutter’s Commentary Comes at a Critical Juncture
Flutter Entertainment, as the parent of FanDuel – one of the US’ largest online sportsbooks – makes these comments on tax strategy at a critical moment in American gambling law reform efforts. Some states have already increased taxation on sports gambling while many more states consider similar moves.
Ohio recently made headlines when it doubled its online sports betting tax rate from 10% to 20%, Illinois adopted a progressive system where larger operators face higher rates, and New Jersey and Maryland are currently discussing increasing sports betting taxes while simultaneously revising promotional deductions. These developments highlight significant progress being made towards expanding sports gambling markets nationwide.
These statements coincided closely with the Global Gaming Expo (G2E) in Las Vegas, where industry experts predicted more states could change their taxation policies on sports wagering – with New Jersey often mentioned as being at the forefront.
Flutter Maintains a Consistent Stance on Betting Taxes
Flutter’s concerns regarding Illinois’ progressive tax model were reiterated during their second-quarter earnings call and Jackson in his interview, both stressing that higher tax rates disproportionately hit smaller operators while larger entities like FanDuel or DraftKings can use different approaches to offset costs associated with them.
Jackson illustrated bettors’ susceptibility to changes in promotional spending with reference to New York, where higher tax burden has led many FanDuel users to migrate over to New Jersey due to more generous promotions possible thanks to lower taxes there.
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