DraftKings and Flutter Entertainment suffered a severe drop in their respective stock prices on May 28th, following a proposed gambling tax increase in Illinois.
DraftKings and Flutter Suffer Stock Price Drop After Proposed Illinois Gambling Tax Increase
Lawmakers in Illinois have debated the possibility of rising gambling tax rates in 2025, which despite being unapproved so far, have impacted DK’s stocks.
Currently, the proposal is for a new tax format that will replace the 15% rate that has been ever-present in Illinois and instead, set rates between 20%-40% – depending on adjusted gaming revenue.
DraftKings and FanDuel, who are both under Flutter Entertainment, qualify for the highest tax rate in Illinois and this has impacted the operators.
The market opened on May 28th, being closed for Memorial day on May 27th and both operators saw a drop in stock price straight away.
Flutter began the weekend at $204.11 per share price and dropped to $196.64 (3.7%) after just half an hour of trading.
In similar fashion, DraftKings suffered an immediate drop on the opening day of trading, dropping from $40.75 a share to £35.88 (12%).
Increasing tax rates has been a discussion in several states across North America, however, Ohio is the only state to have made the step – as Massachusetts lawmakers ended any chance of an increase.
A group of stock analysts from Truist have taken a deeper look into what could occur following a tax increase, debating the pros, cons and possible outcomes.
The analysts said (Via Truist): “The graduated tax scheme could present an opportunity for smaller players to gain some market share at the expense of the two large players while still maintaining lower relative tax rates.
“That said, part of DraftKings’ and FanDuel’s dominance relates to their tech offerings and not just promos/odds. Then there are the wider risks of course of more states increasing taxes, which may or may not be progressive.
“One aspect of the Alliance response we’d echo is that we think states are underestimating the prevalence of the illegal markets, which on-shore operators compete with fiercely.
“We conducted a recent survey of online sports betting players, which showed 31% of respondents bet offshore, although 71% of VIPs do. That stat is in-line with prior data we’ve featured from Juice Reel that shows off-shore books see 18% of the platform’s total tracked bets, although 46%/50% of online sports betting handle/revenues.”
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