March Madness led the Empire State to nearly break its own record for monthly online NY sports betting handle.
New York’s nine online sports betting operators combined for $1.785 billion in handle during March. That is just $3 million shy of the $1.788 billion they combined for in January.
Online New York sports betting did break the all-time monthly US tax revenue record with $83 million in March. The previous high was NY at $76.2 million in January.
NY sports betting has huge FY2023
New York closed out fiscal year 2023, which runs from April 1, 2022 to March 31, 2023, with yearly online sports betting records across the board:
- Handle: $16.4 billion
- Total gross gaming revenue: $1.5 billion
- Net revenue to operators: $714.8 million
- Tax revenue: $744 million
Nation-high tax rate paying off for NY
Operators, who negotiated and agreed to the 51% tax rate on online sports betting revenue, have continually complained about it since implementation.
Yet the state has done massively well, with $744 million in tax revenue for FY2023. Nearly all of that tax revenue (98%) goes to funding educational programs.
There was no traction on a tax reduction during the state budget process, which Gov. Kathy Hochul hopes to wrap up late by April 10.
Why NY sports betting tax rate will stay
Assemblyman Gary Pretlow does not expect that to change:
“I think (it’s not going to change) because it didn’t prove to be really detrimental to any of the operators,” Pretlow told LSR. “Even though they complained, the money goes to education. And it’s not a good fit for me to lower the tax rate, which takes education money out of the state’s coffers, and gives it to profit-making companies.
“If everybody balked in the beginning, it would’ve been OK. But we’ve been in this for a year now. And even though entities are complaining, that this doesn’t happen in other states, it’s been working. I can’t in good conscience at this point lower it.”
NY tax rate bill goes nowhere
Sen. Joe Addabbo introduced a bill that would increase the number of operators, resulting in a tax reduction, as a way to start a conversation.
But Addabbo added that operators would have to make a credible argument that reducing the tax rate would not reduce money going toward education.
“There’s always a possibility (of a change) if something detrimental happens, but I don’t see that happening,” Pretlow said.
An online sports betting tax reduction was not in the Assembly or Senate one-house budgets.
Robins on what’s next for DraftKings
DraftKings CEO Jason Robins said recently his company is still evaluating a potential online NY sports betting pullback in the Empire State.
At a Jan. 31 joint hearing at the state legislature, Robins said DraftKings would be “forced” to offer worse odds and lesser promotions if the 51% tax rate was not reduced.
“These (tax rate) rules were clear. It’s just more the way we got there, and now the fact that there’s a bill in place to change it. It’s not clear this is the final resting spot,” Robins told Joe Pompliano prior to the one-house release. “So in a big market like that, the kind of discussion we’re having internally is do we kind of what to pull back yet?
“What if they lower the tax rate? What if they change it so we can deduct promos? What if they introduce iGaming? Some things that could fundamentally change the market and the economics of the market.
“And then we’re going to kick ourselves because we’re holding back because of this. And so I think we’ll know a lot after this legislative session, and then based on what they do or don’t do, we’ll be able to figure out if we have to make any drastic changes to the way the product is brought to market there.”