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New York lawmakers have opted to maintain the current 51 percent tax rate. That number puts a stranglehold on operators despite New York bringing in the highest sports betting handle of any other US regulated state. The result: Lines likely won't be competitive and bonus offers will be reduced.
To be clear, this 51% tax does not apply directly to gamblers, only operators. It's also more than 51% when you factor in other components. Gamblers will be paying an 8.82% rate of winnings over $5,000 plus 24% federal on all winnings. This could actually result in a chunk of the gambling population contributing to those great revenue numbers going elsewhere.
Noted gaming attorney told Gambling911.com's own Thomas Somach that the actual New York operating tax is closer to 71%. Granted, his number was a bit exaggerated and was based on some quoted figures at the time. The number is still greater than 51% when you factor in the federal excise tax of 0.25% and one other thing.
"This is win or lose and not on gross gaming revenue," Rose said. "That amounts to another 6%. So a 65% rate becomes 71%."
The early speculative reporting of a 65% tax was off by 14% but Rose's 7% on top of the 51% is pretty accurate. That's closer to 60%.
Lawmakers: NY Sports Betting Tax Rate Here to Stay https://t.co/8BhzNtaAQY
— Sue Schneider (@SuziQSchneider) April 2, 2023
No matter how you cut it, you're likely screwed if you're using these apps in the Empire State, at least from a value finding perspective. Sites like BetOnline, as an example, offer a dime line on all MLB games up to -190. The season savings can be in the thousands. Any NY book offering a dime line in baseball likely won't be for long.
And few will prosper more than all those New York bookies and wannabe sportsbook owners who can access free betting software for a fee paid per week per player for just three to four weeks out of a month. Sites like AcePerHead, for example, offer one free week per month for life currently to use their sportsbook software.
Odds are good if New York wasn't the 4th most populated state in the nation, you'd see fewer of these operators.....way fewer.
The state of New York has been enriched with nearly $825 million in tax revenue from $20 billion in bets placed, according to GGB News. Lawmakers aren't exactly going to be scrambling to find ways to lower this revenue.
Representatives have echoed that seniment.
“That’s not going to change,” Rep. Gary Pretlow told PlayUSA in regard to the desire to lower these tax rates. “It’s not going to change ever, as far as I know. I can’t see it changing. It’s going to stay at 51 percent.”
Pretlow's recent remarks are telling in that he pushed a measure last year to lower the tax rate contingent on increasing the number of licensees as a offset to revenues lost. He's likely realized that the true bread winners, DraftKings, BetMGM, FanDuel are already in the New York market. Introducing two or three or more new betting companies will only serve to eat into already existing sportsbooks market share, and probably not by more than 1 percent.
State Senator Joseph Addabbo introduced a similar bill this year, likely as a means to appease operators and make it look like they actually care. They don't.
“Never is a strong word because nothing in politics is forever,” Addabbo told PlayUSA. “But nobody has made a credible argument that lowering the tax rate is going to increase education funds. I don’t think a credible argument exists, but I’m all ears if someone wants to submit something.”
Christian Genetski, president of FanDuel, estimated that the New York handle could drop 20 percent year-over-year.
If a FanDuel or DraftKings, and especially both, opt to leave the state, only then will lawmakers reconsider. One or both leaving will most certainly result in the state's own coffers being depleted.
- Aaron Goldstein, Gambling911.com
