In a Wednesday interview with CNBC’s Jim Cramer, DraftKings CEO Jason Robins questioned a new tax provision related to gambling in President Donald Trump’s megabill, calling it a “very strange change.”
“I do think it’s something that doesn’t makes sense,” he said. “If you can’t deduct all your losses, you know, how does that make sense that you pay income tax on something that’s not actually income.”
Previously, gamblers could deduct all their losses from their winnings so that they are only paying taxes on net winnings. But the new rule makes it so that gamblers can only deduct 90% of their losses from their winnings. For example, if someone wins $1,000 but also loses $1,000, they would only be able to deduct $900 and would have to pay taxes on $100 of winnings.
Robins said he believes the change was made as part of a “technicality” to follow the Byrd rule, which bans “extraneous” matters — usually anything unrelated to federal revenue or spending — in the budget reconciliation process. He said there has been some “appetite” to change the new provision, adding that DraftKings is working with members of Congress to do so.
DraftKings posted a strong quarter Wednesday after close, and shares jumped more than 3% in extended trading. The sports betting company said this quarter set revenue, net income and EBITDA records, with management attributing the success to “continued healthy customer engagement, efficient acquisition of new customers, higher structural Sportsbook hold percentage, and sportsbook-friendly outcomes.”
Robins offered a sanguine outlook on widespread legalization of sports betting, saying he thinks progress has been made across the board. He suggested the practice will eventually be allowed in most states, including large markets like California and Texas.
Online sports betting is currently legal in 34 states, according to the latest information on the American Gaming Association website.
“I can’t imagine a world where you can, you know, bet in 30, 40 plus states, and California is not one of them, and Texas is not one of them,” Robins said.
