New York’s sports betting economy has been roaring since its mobile launch a year ago. But operators and observers have constantly pointed at one way to make it burn more efficiently: lowering an online tax rate that at 51% is one of the highest in the United States.
State Sen. Joe Addabbo is giving it another try, on Tuesday introducing Senate Bill S1962, which would incrementally decrease the state tax rate on mobile wagering while increasing the number of New York online sportsbooks from nine to as many as 16.
The bill would allow the New York State Gaming Commission to:
- Increase the number of online sportsbooks in New York to 14, by Jan. 31, 2024
- Increase the number of online sportsbooks in New York to 16 by Jan. 31, 2025
- Lower the online tax rate to 50% if 10-12 online sportsbooks are licensed.
- Lower the tax rate to 35% with 13-14 operational.
- Lower the tax rate to 25% with at least 15.
Similar bills introduced last March by Addabbo and Assemblyman Gary Pretlow failed. The current Addabbo bill is waiting in committee for action.
Addabbo called the bill “a starting point for negotiations” in an interview with Legal Sports Report.
“The industry or Senate or Assembly has to make a credible argument that increasing the number of operators or decreasing the tax rate makes fiscal sense by increasing revenue and education funds. Somebody is going to have to make that argument,” he added.
The nine operators in New York paid a $25 million licensing fee for the right to do business. New operators would pay $50 million. Mobile sports betting debuted in New York on Jan. 8, 2022.
New York Sports Betting Tax is Loathed and Loved
In an earlier interview with Gaming Today about the prospects for gambling expansion, Jason Ader, CEO and founder of SpringOwl Asset Management, said of New York’s sports betting economy:
“The tax rate in New York, I mean, my God, if that’s the future of gaming … The tax rate in New York is just so prohibitive. What’s really the point? Investing your money in a US government bond would generate more income than an over-50% tax rate in the market.”
While the New York tax rate has been a source of irritation chaffed at by industry analysts and operators — BetMGM chief financial officer Gary Deutsch said in a 2022 investor call that the company would scale back customer-acquisition efforts in the state because the tax figure was “irrational” — it has pumped money into state coffers, which is the idea and the carrot for legislators who might have been otherwise agnostic on gambling.
According to the NYGC, $16.2 billion in wagers were placed online in New York in 2022, a national record. That resulted in $693.1 million in tax revenue for the state, another national record, with sportsbook operators keeping $665.9 of revenue themselves.
New York’s $1.6 billion in online wagers placed last January immediately established it as the national leader. With nearly 20 million residents, New York is the fourth-most-populated in the United States and the largest with legal sports betting.
FanDuel, DraftKings, Caesars, and BetMGM combined to account for 93% of New York’s market share.