Published on: October 15, 2024, 07:07h.
Last updated on: October 15, 2024, 07:07h.
Flutter Entertainment (NYSE: FLUT) CEO Peter Jackson emphasizes the importance of carefully considering the impact of raising online sports betting taxes to avoid driving bettors towards unregulated offshore markets.
In an interview with The Financial Times, Jackson suggests that a tax rate of 18% across the US for online sports wagering would be ideal. This rate is higher than what some states currently charge operators like New Jersey, but lower than the rates in Illinois, New York, and Pennsylvania. He refers to the Laffer curve to support this argument, which shows the relationship between government tax rates and revenue generation.
According to Investopedia, the Laffer curve suggests that taxes can be too low or too high to produce maximum revenue, with both a 0% and 100% income tax rate resulting in $0 in receipts.
Based on this, Jackson advocates for a moderate tax rate that benefits both states and sportsbook operators.
Important Considerations on Flutter Tax Comments
Flutter, based in Dublin, is the parent company of FanDuel, the largest online sportsbook operator in the US. Jackson’s views on US sports wagering taxes come amid increases in taxes in some states and discussions in others to do the same.
Last year, Ohio doubled its online sports betting tax to 20% from 10%. Illinois also implemented a graduated tax system in July, where larger operators like FanDuel and DraftKings (NASDAQ: DKNG) pay higher rates than smaller competitors. New Jersey is also considering raising its sports betting tax, while Maryland is looking into reducing promotional deductions.
Jackson’s statements come shortly after the Global Gaming Expo (G2E) in Las Vegas, where industry experts indicated that some states are likely to raise sports wagering taxes in the near future. New Jersey was highlighted as a potential candidate for tax increases.
Robert Stoddard, a leading U.S. tax partner at KPMG specializing in gaming, mentioned at the conference that state-level sports betting taxes are expected to follow a similar trajectory to alcohol and tobacco taxes. States believe they can raise taxes without significantly affecting consumer behavior.
Consistent Stance on Sports Betting Taxes by Flutter
During the second-quarter results announcement in August, Jackson criticized the graduated tax system in Illinois and warned that states adopting similar approaches or increasing sports betting taxes overall risk pushing bettors towards illegal sportsbooks or alternative operators.
In the Financial Times interview, Jackson highlighted that higher taxes disproportionately impact smaller players compared to larger firms like FanDuel and DraftKings, which have more resources to cope with higher taxes. He also pointed out that bettors are sensitive to reductions in promotional offers, citing the example of New York where FanDuel bettors often cross into New Jersey for better incentives due to lower taxes.