Flutter CEO Peter Jackson has urged US states not to impose a punitive tax rate on gambling companies to avoid pushing bettors towards cheaper, non-licensed operators that illegally do not pay taxes.
According to the Financial Times, Jackson estimates the US sports and online casino market will reach $63 billion by 2030. He pointed out that bigger players such as Flutter, which runs market-leading brand FanDuel in the US, were in a better position to pay higher gambling taxes than smaller rivals, who may have to push up prices in response.
“If you push taxes too high, then people will use illegal operators and tax revenues [will] go down,” Jackson told the publication. Unlike licensed brands, black market operators do not adhere to local state requirements. However, they can still be accessed by Americans, and are often cheaper than their legal counterparts as they avoid paying taxes.
Jackson’s comments come in the backdrop of various US states raising taxes on gambling revenues following a major rise in legal sports betting across the country over the last few years. For instance, Illinois senators this year passed a progressive tax rate of up to 40 percent, from the previous rate of 15 percent, while Ohio also doubled its sports betting tax rate to 20 percent last year.
Some New Jersey legislators have also proposed raising tax rates on online gaming revenues to 30 percent, from a current 13 percent for online sports betting and 15 percent for online casino gaming. Legal sports betting has boomed in the US since 2018, when the Supreme Court struck down a federal law that banned such wagering across most of the country, paving the way for individual states to introduce legislation permitting it.
Sports betting is now permitted in 38 states as well as Washington DC, according to the American Gaming Association, while online casino gambling is legal in just seven jurisdictions. Flutter paid £3.2 billion ($4.1 billion) in tax globally in 2023, with the US accounting for a third of that sum.
“If the [US] states are genuinely trying to maximize their tax revenues, they should be very thoughtful about pushing the tax rates up,” Jackson said, adding that the best rate would be 18 percent for the industry. He cited the Laffer curve, which illustrates the theoretical relationship between tax rates and the amount of tax revenue a government collects.
Jackson said that in New York, where “taxes are very high and we offer customers [fewer] free bets,” some FanDuel customers opted instead to place bets in neighboring New Jersey because “they get more generosity from us.” New York’s 51 percent sports betting tax rate is the highest in the US.
However, Jackson also argued that moderately higher taxes “serve the larger players better [than smaller ones], as we’ve got more levers we can pull to help mitigate them”. He said the company stood to win customers from small operators if they were forced to raise their prices and reduce marketing spend to navigate higher duties.
Jackson’s tax warning comes after he told investors last month that Flutter, which shifted its primary listing from London to New York in May, was expecting to more than double its core profit by 2027 from this year’s projected $2.5 billion to “over $5 billion,” with the US accounting for nearly half of that sum.
Jackson put the upgrade down to a higher frequency of betting than previously estimated, as well as better customer retention. By 2030, Flutter expects 80 percent of the population to have access to legal online sports betting and 25 percent to online casino games.
Original article: https://www.yogonet.com/international/noticias/2024/10/15/82021-flutter-ceo-warns-higher-taxes-on-us-betting-could-push-gamblers-towards-unlicensed-operators
