Sports betting operator DraftKings has created a corporate political action committee.
The company submitted a filing to the Federal Election Commission under the separate segregated funds category, which enables it to solicit funding from individuals associated with connected organizations.
DraftKings is the first major sports betting platform to create a corporate PAC. Fantasy sports company PrizePicks created one in 2024, while groups such as MGM Resorts, Caesars Entertainment, and the American Gaming Association, of which DraftKings is a member, have launched individual PACs.
Why create a PAC?
The creation of DraftKings’ corporate PAC represents the company’s first official step into politics. It has previously been a part of numerous legislative efforts, such as the push to get Missouri sports betting over the line or the failed Proposition 27 in California, which would’ve authorized online sports betting with commercial sportsbook operators.
A DraftKings spokesperson told The Hill the company launched the PAC to gain more influence in politics.
“We have established this PAC to support state and federal candidates and organizations who have shown an interest in issues affecting our business.”
While 38 states have legalized sports betting, each has its own rules and regulations ... and tax structure. That's most apparent in Illinois.
Lawmakers there recently approved a $.25-.50 per-bet tax on all wagers less than one year after they raised the sports betting revenue tax rate from 15% to 20%-40%, with just the two biggest sports betting operators, DraftKings and FanDue, paying the highest rate.
The first-of-its-kind per-bet tax is expected to cost the two an extra nine figures in taxes on top of the $276 million they paid last year.
Both operators responded to the tax by adding a $.50 surcharge on every wager, effectively worsening their customers’ betting odds. The companies have promised to remove the surcharge if Illinois removes its per-bet tax.
The DraftKings spokesperson told the Hill that Illinois' high tax rate ultimately boosts illegal sports betting operations.
“DraftKings’ ultimate goal is to build the best, most trusted, and most customer-centric destination for our players. The recent tax increase in Illinois makes it harder to provide the best service to our players while it simultaneously incentivizes more players to wager in the unregulated, illegal market.”
Changing landscape
DraftKings ensured that its PAC will fully comply with the rules associated with federal and state campaign finance and reporting laws. The company also said it is committed to an open line of communication between state and federal officials.
“Among other things, we are monitoring a range of regulatory, tax, and licensing policies around the country … DraftKings may prioritize issues that impact business operations, including the expansion of the legal, regulated online betting market.”
The momentum in the sports betting industry has largely swung from widespread expansion to tax increases.
Wyoming legislators want to double their state's sports betting tax rate from 10% to 20%. Maryland has already approved an increase from 15% to 20%, and Louisiana recently signed off on 6-1/2% increase, from 15% to 21.5%.
There’s also widespread debate over the legality of prediction platforms, which offer another potential challenge to licensed sportsbooks such as DraftKings. These federally regulated platforms offer contracts on sports events and argue they are not subject to state regulations since they have complied with the rules laid out by the Commodities Futures Trading Commission.
Several state regulators have already sent cease-and-desist orders to prediction platform companies, though a lengthy legal battle seems to be the most likely outcome for the debate, starting in New Jersey.
Lawmakers have also taken issue with FanDuel and DraftKings, accusing them of working together to effectively put their competitors out of business following a failed merger in 2016.