DraftKings’ new betting surcharge is “out of touch with the common people” according to VSiN’s Wyatt Tomchek.

Tomchek and Jared Smith, host of the A Numbers Game show, were reacting to the news that DraftKings will add a surcharge to every winning bet in states with multiple operators and tax rates higher than 20% from January 2025. 

This new measure will impact bettors in Vermont, Pennsylvania, Illinois and New York – a state that boasts a 51% tax rate. 

On the news, Smith said: “I think it’s an atrocious way to pass through what has been a very expensive venture for a lot of these sportsbooks which are operating in states with really high tax rates. 

“I think there’s a certain level in places like New York where operators just have to admit defeat, [that they] are not going to be profitable if there’s a high tax rate. We’ve now had two years of New York’s online market and the results have been timid because of the ridiculously high tax rate.”

During its Q2 earnings call, DraftKings CEO Jason Robins said that the move was “what’s best for us” and also suggested that other operators may come to the same conclusion regarding tax.

Smith agreed that DraftKings may not be the only operator to bring in a similar charge and added that the move is a “big checkpoint” in the sports betting experiment in the US.

He said: “It started in 2019 and it basically was the wild west. Then the market evolved and COVID hit and I think was an accelerant to the sports betting industry.

“Once New York got activated that was a massive day and I remember when the story broke the entire question revolved around tax rates, and when we heard 51% we were like – that is not a sustainable business model, I don’t know how these books are going to make money. Two years later they haven’t and now they are passing that through to the average Joe bettor.”

Smith finished by saying that the surcharge will be met with “the stiffest of stiff arms as people are not going to like this”.