Despite concerns across the United States following the passing of Donald Trump’s controversial “One Big Beautiful Bill Act," particularly related to movement on sports betting, CNBC analyst Jim Cramer says his concern level is unchanged.
Key Takeaways
- Cramer reaffirmed his bullish stance on DraftKings and Flutter, even as a new U.S. tax provision limits how much gamblers can deduct in losses.
- The provision, part of Trump’s “One Big Beautiful Bill Act,” could impact professional gamblers, though that doesn’t appear to be of concern to Cramer
- The move could turn out beneficial for the betting companies, given that they’re catering to more casual bettors.
"Ultimately, I think this is something we need to watch, but it doesn't change my bullish attitude toward DraftKings and Flutter," Cramer said. "The thesis here is very simple: these two companies have emerged as an effective duopoly in online sports betting."
The tax megabill, which makes several sweeping changes to taxes across the United States, includes a provision that will impact sports betting giants, including major players DraftKings and Flutter (FanDuel's parent company).
According to NBC News, the tax provision will change such that gamblers will now only be able to deduct 90% of losses from winnings, as opposed to the prior setup that allowed deductions on the entirety of losses.
Most notably, the deal could be most damaging to professional gamblers, who often work with figures in the many millions in terms of winnings and losses. As a byproduct, however, Cramer notes that casual and recreational gamblers could also move away from betting driven by fears that they could be taxed if they break even or wind up in the negatives.
"The gambling tax change is clearly not ideal, but there's a very good chance it won't have much impact on either of these companies, and it could even help them," Cramer said of DraftKings and Flutter, two of the most powerful forces in the industry that comprise nearly 53% of all iGaming market share in the United States according to a report earlier this month.
In addition to fears of warding off potential new gamblers being overblown, the CNBC analyst also pointed to enormous growth potential likely to come for these potential titans. Notably, states such as California, Texas, and Florida -- more than a quarter of the U.S. population -- currently either do not allow iGaming or do not have a fully regulated free market.
Other changes shifting market
In addition to the changes outlined in Trump’s “One Big Beautiful Bill Act,” other changes on the horizon are set to continue to shift the market as well.
Among those, Illinois recently became the first state to introduce a new per-bet tax, charging bettors between 20-50 cents per wager, with costs being passed onto consumers. There’s no word on whether or not that could move elsewhere, though that certainly doesn’t seem out of the realm of possibilities.
Other states, most recently New Jersey, have also made changes to their sports betting landscape, bumping tax rates for online sportsbooks as well as internet casino operators and daily fantasy sports companies.
