BetRivers refuses to copy DraftKings' customer surcharge plan, industry speculation turns to other operators

Rush Street Interactive (RSI), the parent company of BetRivers, announced on Monday it will not impose a customer surcharge on winning bets, a decision that contrasts sharply with DraftKings' recent move to implement such fees in high-tax states.

“As we put our customers first, it was an easy decision for us," RSI CEO Richard Schwartz stated. This announcement comes in the wake of DraftKings' decision to introduce a surcharge on winnings in Pennsylvania, New York, Illinois, and Vermont to offset high state tax rates. DraftKings CEO Jason Robins defended the move as necessary for competitiveness and improving customer experience.

The industry is now watching to see if other major sportsbooks will follow DraftKings' lead. Analysts are divided on the matter. Joseph Greff of J.P. Morgan remarked: “Our initial reaction is that this is an interesting way to mitigate higher gaming taxes.” However, Barry Jonas of Truist noted: “FanDuel may have more room to adjust pricing to offset higher IL taxes, along with lowering promos.” 

Regulus Partners offered a harsher critique, describing DraftKings' surcharge as “economically illiterate.” Concerns are growing that if DraftKings is the only operator with such a fee, it could lose market share. Carlo Santarelli of Deutsche Bank warned that “larger and more sophisticated customers will depart almost immediately.”

Shaun Kelley of Bank of America Merrill Lynch highlighted that the surcharge's success hinges on widespread adoption by competitors. The fee’s profitability depends significantly on the competitive landscape and broader adoption, he said.

RSI said its refusal to implement a surcharge aligns with its commitment to "customer satisfaction," a strategy the company credits with improving BetRivers' market position in Pennsylvania. Over the past three months, BetRivers has increased its market share, becoming a top-five operator by handle.

With upcoming earnings calls, particularly Flutter’s on August 13, investors are eager for indications of whether other operators like FanDuel and PENN Entertainment will adopt similar surcharges.