DraftKings, FanDuel Earnings Could Be Pinched by Maryland Tax Increase Plan
Posted on: January 15, 2025, 04:36h.
Last updated on: January 15, 2025, 04:36h.
DraftKings (NASDAQ: DKNG) and FanDuel are among the online sports betting operators that could see their earnings sapped if a proposal to double Maryland’s tax rate on that form of betting is passed.

Gov. Wes Moore’s (D) newly unveiled 25 budget proposes doubling the state’s levy on sports wagering to 30% from 15% while boosting the tax rate on table games at brick-and-mortar casinos to 25% from 20%. The budget was released Tuesday and, as prior sports betting tax increases have done, pressured shares of operators.
On Wednesday, shares of DraftKings dipped 3.20% on heavy volume while FanDuel parent Flutter Entertainment (NYSE: FLUT) retreated 1.65%, also on above-average turnover. In a new report to clients, Truist Securities analyst Barry Jonas estimated that if Moore’s proposal is implemented, it could pinch FanDuel earnings before interest, taxes, depreciation, and amortization (EBITDA) by $45 to $50 million while sapping DraftKings’ EBITDA by $25 million to $30 million.
He added BetMGM could see EBITDA decreased by $6 million while Caesars Sportsbook and Penn Entertainment’s (NASDAQ: PENN) ESPN Bet would each endure negative impacts of several million dollars.
For Now, Just a Proposal
State increases on sports wagering and related proposals have previously spooked investors and Moore’s pitch had the same effect, but some analysts cautioned that for now, it’s just an idea.
This is not a tax increase. It is a proposal. The agenda will now need to be legislated in committees, thereby likely making Speaker of the House, Adrienne Jones, a key figure in this process,” said Deutsche Bank analyst Carlo Santarelli in a note.
Jones, a Democrat, figures prominently in the equation not only because of her leadership position, but also because her district is home to two of the land-based casinos in Baltimore. That could make her reluctant to support a plan that increases the taxes paid on table game winnings to 25% from 20%.
Truist’s Jonas cautioned that the near-term issue for sports betting equities such as DraftKings and Flutter is that more states could consider boosting sports wagering taxes. Illinois did so last year, moving to a graduate tax scheme that significantly increased levies on the largest operators — namely DraftKings and FanDuel. Other states have considered higher sports betting levies and while some of those proposals have died, analysts and investors fret that if more come to life, gaming companies’ earnings will suffer.
Moore Plan Could Vault Maryland to Upper Tier of OSB Taxes
At the current rate of 15%, Maryland is tied with Louisiana and Virginia for the 12th-highest tax in the country among the states that permit online sports betting. Fifteen percent, give or take a few basis points, is the area some executives believe states and operators can find common ground.
Should Moore’s sports wagering tax increase become law, it’d vault Maryland to the upper tier in terms of such taxes. Just five states — New Hampshire, New York, Pennsylvania, Rhode Island, and Vermont — have online sports wagering taxes in excess of 30%.
The tax Illinois applies to the biggest operators by market share is also above that level, but not all gaming companies there are subject to that rate.
At 6.75%, Iowa and Nevada have the lowest sports betting taxes in the US.
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Last Comment ( 1 )
Ha Ha Ha. They said legalizing sports betting would drive the greedy illegal bookmakers out of business. But now it looks like the greedy politicians may bankrupt the legal companies. Already about 5 sports betting firms have pulled out of my state in the last two years. We'll see who has the last laugh.