Flutter Entertainment (NYSE: FLUT) CEO Peter Jackson has cautioned U.S. states on increasing online sports betting taxes, warning that excessive rates could drive bettors to unregulated offshore markets.

In a recent Financial Times interview, Jackson proposed an ideal tax rate of 18% across the U.S. for online sports betting. While higher than New Jersey’s current rate, it is notably lower than rates in states like Illinois, New York, and Pennsylvania. He referenced the Laffer curve to support his argument, emphasizing that excessive tax rates can reduce government revenue, as both extremely low and high taxes yield minimal returns.

Jackson advocates for a balanced, “Goldilocks” approach to taxation—neither too high nor too low—to benefit both state governments and sportsbook operators.

Timely Insight Amid Tax Adjustments

Flutter, the parent company of FanDuel, the largest U.S. sportsbook, made these comments amid rising tax rates in various states. Ohio recently doubled its online sports betting tax to 20%, and Illinois adopted a graduated tax system that levies higher rates on major operators like FanDuel and DraftKings (NASDAQ: DKNG). New Jersey may also soon raise its sports betting taxes, while Maryland explores limiting promotional deductions.

These comments followed the Global Gaming Expo (G2E) in Las Vegas, where analysts predicted more states will likely increase sports betting taxes. Some experts, like Robert Stoddard, KPMG’s lead U.S. gaming tax partner, suggested state sports betting taxes might trend similarly to taxes on alcohol and tobacco, with governments assuming they can increase taxes without deterring consumers.

Flutter’s Consistent Position on Sports Betting Taxes

Flutter’s stance on tax rates remains firm, as shown in its second-quarter earnings report where Jackson critiqued Illinois’ graduated tax system. He argued that such schemes disadvantage smaller operators and might drive bettors toward black-market alternatives. In his Financial Times interview, Jackson noted that larger companies like FanDuel and DraftKings are better positioned to absorb higher tax burdens, whereas smaller operators may struggle.

Jackson also highlighted how bettors are influenced by promotional offerings. Using New York as an example, he noted that many FanDuel users cross into New Jersey to take advantage of more generous promotions enabled by lower taxes in that state.

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