DraftKings, FanDuel Fees Deemed Taxable in Landmark IRS Memo (1)

Daily fantasy sports companies like FanDuel and DraftKings must pay federal excise tax on their entry fees, the IRS has decided, in an internal memo that could cause a major shakeup in the industry.

An IRS Chief Counsel Memorandum said those companies must pay tax on every wager—the entry fee—they accept as well as an annual occupational tax on each person accepting those wagers. Those taking wagers must also register with the IRS.

“This is one of the most significant events in the evolution of sports betting in the United States that has happened in a long time,” ...