Flutter Ditches US Winnings Tax; DraftKings Reverses Decision
Date: 2024-08-14 Author: Alex Crawford Categories: EVENTS
On August 13, 2024, Flutter CEO Peter Jackson said the company does not plan to follow DraftKings’ lead and impose an additional winnings tax on users. The news came after the company reported second-quarter results that beat analysts’ expectations and raised its revenue guidance for fiscal 2024.
In early August, DraftKings announced plans to impose a winnings tax in four high-tax states, starting January 1, 2025. The move raised questions among industry experts about whether other companies, especially market leader Flutter, would follow suit.
“We have no plans to impose an additional winnings tax,” Jackson said during a Q&A. However, he declined to elaborate further despite subsequent inquiries.
Less than an hour after the Flutter conference ended, DraftKings issued a statement announcing it was abandoning its original idea.
Other companies have also abandoned the tax idea
Before this decision, companies like Rush Street Interactive and Penn Entertainment had also said they had no plans to implement a tax on winnings anytime soon. The idea has been met with skepticism from analysts and consumers, but DraftKings co-founder Jason Robins recently argued in a keynote that players would be willing to pay to use the platform.
For Jackson, the question was a minor one. He and new CFO Rob Coldrake focused on discussing the company’s strong financial performance and growth. Coldrake, the newly appointed CFO, expressed excitement about the opportunity to share good news on his first keynote.
Flutter has revised its fiscal 2024 guidance upward after strong results. According to the report, the company increased its EBITDA guidance by $70 million. For the second quarter, Flutter reported net income of $297 million, up $94 million from the same period in 2023.
Flutter's growth and prospects in the global market
The company's success is largely due to the leadership of FanDuel, which has strengthened its position as the leading online betting platform in the United States. In the second quarter, FanDuel accounted for 47% of the market share in wagering revenue and 25% of the online casino market. The company's overall GGR market share in the United States was 38%.
Particular attention was paid to growth in the North Carolina market, where the company's net gaming revenue was 59% in the second quarter.
Flutter's products also exceeded expectations on the international stage, including in the UK, Ireland and Italy. The UK and Ireland region saw revenues grow by 10%, while Europe saw strong growth in online casino revenue and positive results from the European Championships.
Taxation and further acquisitions
During the conference, analysts were also interested in how the company plans to cope with the tax hike in Illinois, where the tax rate was increased to 40% for the largest operators from July this year. Jackson acknowledged that such a system could lead to companies going offshore.
As for possible acquisitions, Jackson was tight-lipped, but stressed that Flutter will continue to pursue M&A if it helps strengthen the company’s position in local markets.
