Rush Street Interactive Takes Shot at DraftKings, Says No Surcharge

Posted on: August 5, 2024, 09:50h. 

Last updated on: August 5, 2024, 09:58h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

In a clear shot at rival DraftKings (NASDAQ: DKNG), Rush Street Interactive (NYSE: RSI) announced Monday it has no plans to implement a surcharge on sports wagers.

Rush Street Interactive
A Rush Street Interactive advertisement. The company said it won’t follow DraftKings in implementing a surcharge on winning sports bets in high-tax states. (Image: X)

Rush Street Interactive’s proclamation arrived after DraftKings said last Thursday that it’s planning to launch a small surcharge on winning sports wagers placed by bettors in Illinois, New York, Pennsylvania, and Vermont. That levy goes into effect on Jan. 1, 2025. Of those four states, Rush Street operates in Illinois, New York, and Pennsylvania.

As we put our customers first, it was an easy decision for us,” said Rush Street Interactive CEO Richard Schwartz in a statement.

The gaming company billed the decision to eschew a surcharge as confirmation of its “customer-centric policies.” Chicago-based Rush Street Interactive operates BetRivers, PlaySugarhouse, and RushBet brands.

DraftKings Surcharge Yet to Lure Copycats

In the wake of the DraftKings announcement, there’s been considerable speculation among bettors and investors about whether or not other gaming companies would follow suit. While it’s been just five days since DraftKings announced the scheme, it’s still alone.

Rush Street Interactive is the first operator to confirm it won’t add a tax on winning bets, but some sports betting industry experts noted that with BetMGM having provided its first-half financial update last week and making no mention of a surcharge, that company probably won’t mimic the DraftKings plan because the July 29 report from BetMGM would have been the opportune time to tell investors that such a plan was in the offing.

Likewise, Caesars Entertainment (NASDAQ: CZR) reported second-quarter results last week, noting earnings before interest, taxes, depreciation, and amortization (EBITDA) at its digital unit surged, but that company made no mention of a surcharge.

A test of the surcharge gambit could arrive on August 13 when FanDuel parent Flutter Entertainment (NYSE: FLUT) reports second-quarter numbers. By market share, FanDuel is the lone credible competitor to DraftKings, but as of yet, Flutter hasn’t publicly commented on the surcharge issue.

Rush Street Interactive Could Provide Surcharge Template

DraftKings and FanDuel have formed a nearly impenetrable duopoly in the US sports wagering space – one born largely out of superior technology and strong brand recognition. However, those traits don’t guarantee DraftKings clients in the aforementioned states will stick around and pay an added tax on their winning bets.

It’s possible that rivals will let DraftKings take its chances and deal with the fallout from the surcharge plan, and that RSI may have just provided the playbook to foster some goodwill among bettors who are now motivated to wager elsewhere.

“RSI remains committed to maintaining its leadership position in the industry by continuously prioritizing the needs and preferences of its players. We believe that RSI’s focus on customer satisfaction, coupled with its innovative rewards and loyalty programs, sets a benchmark for excellence in the online gaming industry,” concluded Schwartz.