Rush Street Interactive the Latest to Say They Won't Be Imposing Surcharge on Customers

Rush Street Interactive, the parent company of BetRivers, confirmed they have no intention of imposing a surcharge on customers.

CEO Richard Schwartz appeared to be taking a not-so-subtle shot at DraftKings.

"As we put our customers first, it was an easy decision for us," he said.

Schwartz was responding to DraftKings controversial plan to impose a surcharge on customers in four states where the operating tax is 20% or greater.

These states include: Illinois, New York, Pennsylvania and Vermont.

"There is a solution here.  As you know many revenue-based taxes are passed along to the customer.  The online gambling industry has chosen not to pursue this approach in lower tax jurisdictions, but it has in higher tax jurisdictions like Germany.  We are planning to implement a gaming tax surcharge on a customer's Net Winnings in any state with a tax rate above 20% that has multiple sports betting operators. The surcharge will be fairly nominal to the customer." 

The company explains that, in Illinois, this surcharge will amount to a low to mid-single digit percentage on Net Winnings.

This surcharge will commence as of January 1, 2025.

The big question: Will customers go for it?

ESPN reporter Dave Purdum conducted a survey in recent days with 4873 participating.  80.8% said they will not play with DraftKings if a surcharge is imposed.

If your preferred sportsbook begins charging a tax surcharge, even just a tiny percentage of winning bets, will you continue to bet there?

— David Payne Purdum (@DavidPurdum) August 1, 2024

DraftKings is likely hoping these are the most educated customers who follow Twitter and that the vast majority of their customers won't notice any addition fees.

But try tacking on an additional 5% to the bill at a restaurant and see how many diners will return.  If a $500 win pays $500 at FanDuel and just $475 at DraftKings, odds are good customers will avoid the latter.

And this all comes prior to taxes.  As an example, sports bet winnings over $600 are subject to a 15% tax rate in Illinois. It’s also standard procedure for casinos in Illinois to withhold 25% of winnings for federal tax purposes.  Offshore sports books like BetUS leave it to customers to report their winnings when filing taxes.

Players are able to deduct amounts wagered and lost in Illinois — but may not deduct wagers on winning bets.