Rush Street Interactive has said it has “no plans” to implement a customer surcharge like its sports betting industry rival DraftKings.
The BetRivers operator today (5 August) made a veiled criticism against DraftKings by stating it did not intend to implement a surcharge, thereby reaffirming its dedication to “providing exceptional value to its customers”.
Rush Street CEO Richard Schwartz said: “As we put our customers first, it was an easy decision for us.”
The statement follows DraftKings announcing a controversial winnings surcharge in high-tax, non-monopoly states during its Q2 report last week, leading to negative reactions across the sector.
Some defenders of DraftKings’ decision have argued other operators may choose to implement a similar scheme to offset the increasing tax burden amid a wider drive towards profitability.
While RSI is the first major operator to rule out such a policy, both Caesars’ and BetMGM’s recent earnings calls passed without mention of a surcharge.
Schwartz added: “RSI remains committed to maintaining its leadership position in the industry by continuously prioritising 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.”
DraftKings’ plan to introduce a surcharge has seen some initial negative reactions, notably from Regulus Partners, who called for the “self-defeating” policy to be dropped immediately.
DraftKings stated the surcharge will apply in non-monopoly states with a tax rate over 20%, meaning Illinois, New York, Pennsylvania, and Vermont, and will apply from 1 January 2025.
Analysts offer lukewarm support
However, some analysts have offered more positive feedback.
Analysts at Macquarie Equity Research argued a gaming surcharge tax on customers in high-taxed states makes sense and could provide significant EBITDA upside, even in a scenario where DraftKings lost up to 30% of its market share.
The analysts said: “In our view, a surcharge tax could provide an array of benefits for DKNG, including 1) operational stability, 2) player reinvestment optionality, 3) regulatory benefits, and 4) faster EBITDA ramp.
“Mgmt noted it will be data-dependent and could retract its plans if market-share losses are too high, for example.”
This sentiment was echoed by the latest note from analysts at JMP Securities, who argued bettors are becoming loyal and the policy could work in theory.
They said: “We do not believe mass players are as price/surcharge conscious, but VIPs, comprising a large concentration of revenue for operators, could end up being the deciding factor given how statical these bettors are around outcomes.
“The timing of the surcharge, slated to start January 1, 2025, is still up for debate, but a push for customer acquisition leading into football season, while continuing to build loyalty, buys the company time on if it follows through with the initiative.”
Meanwhile, analysts at Truist Securities said management has given the surcharge much thought but could change course if it backfired.
Barry Jonas said: “With more questions than answers at this point around the surcharge, we note that FanDuel parent Flutter’s…. Q2 earnings call is on Tuesday 13 August.
“We’ll be listening for any commentary regarding DKNG’s proposed change, and any indication of their response.
“As we’ve noted before, FanDuel may have more room to adjust pricing to offset higher IL taxes, along with lowering promos.
“If FanDuel haven’t been thinking about their own surcharge, it’s unclear if 12 days is enough time for FanDuel to make a decision to follow DKNG or not.”