FanDuel urges U.S. states to reconsider rising sports betting taxes

FanDuel has called on U.S. lawmakers to ease rising taxes on sports betting operators, warning that increasing fiscal pressure could jeopardize the industry’s long-term viability.

Speaking at the National Council of Legislators from Gaming States (NCLGS) conference, Cesar Fernandez, a government affairs executive at FanDuel, said that high tax rates and operational expenses are significantly eroding profits across the regulated sports betting sector, reports SiGMA.

“We view ourselves not just as a net contributor to these states but also a partner in their state funding,” Fernandez said. “But we’ve had a little bit of a narrative shift as we’re engaging with policymakers throughout the country, and that’s now ‘tax gambling companies, they can afford it’.”

Despite a national hold rate of around 10%, Fernandez said actual profits are substantially lower once bonuses, marketing, salaries, infrastructure, and taxes are factored in. According to FanDuel, sportsbooks earn just $1.55 in profit for every $100 wagered - a 1.5% net margin.

New York’s 51% tax on gross gaming revenue was cited as one of the most challenging environments for operators. Illinois has also introduced a $0.50 surcharge per wager, prompting major sportsbooks including FanDuel, DraftKings, and Fanatics Sportsbook to pass the added cost directly to users.

FanDuel and other operators are advocating for the legalization of online casinos, which they say offer higher margins, more stable revenue, and lower promotional outlays. Online casinos are currently legal in only seven U.S. states, with legislative efforts underway in Ohio, Maine, Maryland, and several larger markets, including New York and Illinois.

In a separate panel, FanDuel attorney Brad Fischer warned that mounting taxes and regulations could be pushing players toward unregulated sweepstakes casinos.

“It’s happening right now, and it’s only going to become more prevalent in the future,” Fischer said. “This is not fear-mongering—this is just reality.”

Industry officials argue that while regulated operators contribute substantially to state revenues, excessive fiscal burdens may stunt market growth and drive users toward illegal alternatives that offer no consumer protection or tax benefits.