DraftKings tests subscription service amid New York’s high gaming taxes

DraftKings has entered a new era in sports betting by launching a subscription service aimed at offsetting the state’s hefty tax burden.

The company’s bold move introduces DraftKings Sportsbook+, a monthly plan designed to boost the odds for subscribers and enhance their betting experience. The service, currently in its testing phase, is available to select customers in New York, a state with some of the highest gaming taxes in the U.S.

The subscription model, which costs $20 per month, was quietly rolled out on December 28, 2024. For those who sign up, the service offers up to a 100% boost on winning parlays, depending on the size of the bet.

A two-leg parlay receives a 10% boost, a six-leg parlay gets a 50% increase, and an 11-leg parlay—one of the more complex betting combinations—receives the full 100% boost. While the maximum bet eligible for this boost is $25, the service is expected to attract regular parlay bettors, who can stand to gain substantial returns from these boosts.

New York’s tax landscape

New York is a prime testing ground for DraftKings, thanks to its status as one of the largest sports betting markets in the U.S. However, the state’s 51% tax on sports wagering puts significant pressure on sportsbooks, including DraftKings.

The 51% tax is among the highest in the nation, shared only by New Hampshire. In such a taxing environment, sportsbooks must be strategic in finding ways to remain profitable while continuing to offer competitive odds.

DraftKings’ subscription plan could be a smart solution to combat these high taxes, which has historically led the company to explore various alternative strategies. The subscription service allows DraftKings to generate revenue from customer subscriptions, which may not be subject to the same taxing rules as regular bets.

This is in contrast to a previous proposal by DraftKings to implement a surcharge on winning bets in New York, a strategy that was widely criticized and ultimately scrapped in 2024.

The launch of DraftKings Sportsbook+ is the company’s first step into the subscription service market, and if successful, could set a precedent for other sportsbooks to follow. The company hopes to attract frequent bettors who regularly engage with parlays—a popular but complex form of betting.

These bets, which involve wagering on multiple outcomes across different events, are lucrative for sportsbooks, which makes them a natural focal point for the new service.

Challenges ahead

While the subscription model shows promise, there are several hurdles DraftKings will need to overcome. One challenge is whether other states will approve of the model.

The New York State Gaming Commission has already given its stamp of approval, but regulators in other states may take a closer look before granting the same permission.

The service may also face pushback from responsible gambling advocates, who are concerned about the potential for increased spending through a “sunk cost” effect, where customers feel compelled to bet more because they have already paid for the subscription.

Furthermore, the idea of a subscription model is not exclusive to DraftKings. Competitors, including FanDuel and BetMGM, could easily replicate the idea if it proves successful, leading to a new wave of subscription services in the industry.

This would level the playing field but also mean that DraftKings would have to find additional ways to distinguish its offering to retain customers.

The company has also offered a free first month for users who sign up, which will help attract customers to the platform without immediate financial commitment. After the free month, users are charged $20 monthly for the subscription service.

DraftKings has yet to disclose how many people have signed up for the service so far, but early data will likely inform whether the service will be expanded beyond New York.

With more than $1 billion in annual revenue at stake, DraftKings will continue to refine its subscription plan as it navigates the complex regulatory landscape of U.S. gaming markets.

If successful, DraftKings Sportsbook+ could evolve into a major revenue stream for the company and perhaps even disrupt the entire sports betting industry.