177% up to 5BTC + 77 Free Spins!
New players only. Exclusive Welcome Bonus of 177% + 77 Free Spins
FanDuel is speaking out about rising tax pressures on the sports betting industry, warning that excessive costs could undercut its ability to survive long-term. The message was delivered during the recent National Council of Legislators from Gaming States (NCLGS) conference, where company representatives urged lawmakers to reconsider the current direction.
Good to know
Cesar Fernandez, a government affairs executive at FanDuel, addressed the room full of state lawmakers with a clear message: rising taxes and high operational costs are squeezing sportsbook margins far tighter than many assume. Even though the national hold rate sits around 10%, FanDuel estimates that the actual net margin drops to just 1.5% once everything is factored in—bonuses, marketing, salaries, infrastructure, and taxes.
“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… and that’s now ‘tax gambling companies, they can afford it’.”
States like New York, which imposes a 51% tax on gross gaming revenue, were flagged as among the most difficult markets to operate in. Illinois has recently added a $0.50-per-bet surcharge, prompting FanDuel and other top sportsbooks like DraftKings and Fanatics Sportsbook to shift that cost onto users.
Operators argue that this kind of environment could limit the industry’s ability to invest in customer acquisition or innovation, ultimately slowing growth.
To help balance the scales, FanDuel and other operators are pushing for the legalization of online casinos. Unlike sports betting, online casino games carry higher margins, fewer promotions, and steadier revenue streams. So far, only seven states allow iCasino play, but legislation is under consideration in Ohio, Maryland, Maine, and large markets like New York and Illinois.
FanDuel believes expanding into iCasino would help stabilize operator finances and create additional state tax revenue without putting more strain on sports betting.
FanDuel attorney Brad Fischer used a separate panel to caution lawmakers that excessive regulation and taxation could push bettors toward unregulated sweepstakes platforms.
“It’s happening right now, and it’s only going to become more prevalent in the future,” he said. “This is not fear-mongering—this is just reality.”
Industry officials echoed this concern, warning that while regulated sportsbooks do contribute sizable tax revenue, going too far could drive users to alternatives that offer no consumer protections and no returns for state budgets.