New York Assemblyman Gary Pretlow has worked hard with Sen. Joe Addabbo Jr. to get mobile NY sports betting legalized for years.
Now that it is legal, Pretlow is not certain how all that hard work will pay off.
Both legislators put forward a bill in January to legalize 14 online NY sportsbooks while taxing sports betting revenue at 12%.
Unfortunately for them – and maybe New York bettors – former Gov. Andrew Cuomo had a different idea. Both legislators helped negotiate Cuomo’s plan into something a bit better, with at least four sportsbooks in the state. But the high tax rate of 50% or more managed to stick.
Pretlow: let everyone participate in NY sports betting
Pretlow told LSR he would be disappointed if just nine sportsbooks are licensed, as reported by the New York Post.
Licensing nine operators for online sports betting means the state gets 51% of gross revenue. The tax would fall to 35% if all six applications and 14 operators were approved.
But a lower tax rate would be better for the market, Pretlow said. At more than 50%, New York is helping NJ sportsbooks and others more than their own, he explained:
“My suggestion, and they’re not going to listen to me, is to accept everybody and to let the market determine who’s successful and who isn’t. For them to harp on this ridiculous 52% or 53% tax rate, I don’t think is going to be doable. I think it’s going to adversely affect the odds, which is going to adversely affect the play.
“If you know anything about gaming, you would give your left foot for a half a point. And if New Jersey is going to offer better odds on a game, any game, than New York, the people that are betting – especially the big bettors – they’re going to go to Jersey.
“They’re used to going to Jersey already, they go to Jersey now, and for that half a point they’re going to go to Jersey. And they can go to Connecticut. We’re surrounded by entities that will have better odds than what we have.”
‘I’m ready to scrap it now’
Pretlow could not say how short of a leash the market would be on if it wound up underachieving because it is not really up to the legislature anymore.
“Well, I don’t know because they’ve taken that out of the legislature’s hands,” he said. “That’s going to be up to the gaming commission. And if I were one of the winners, I’d ask for a long-term contract because I’m ready to scrap it right now and go back to what I think it should be.”
If the nine sportsbooks are licensed at 51%, they will get such a contract. Any tax rate above 50% locks the operators into a 10-year contract, per the RFA.
Pretlow does, however, expect operators to have something to say if business gets too tough.
“I just think it sets a bad precedent, what we’re doing. Because I know what’s going to happen. Five years from now they’re going to come back and say “We’re not making any money, we need a tax decrease because this isn’t working,” and they’ll go back to the Pretlow-Addabbo plan.”
Pretlow would ‘look forward’ to NY sports betting suits
The wording of the RFA’s selection process could leave the door open for a lawsuit if a bidder that could grow the market is not offered a license:
“If the Committee determines that such aggregate revenue is higher than the aggregate revenue without the additional Platform Provider(s) and Operator(s) associated with such next-highest-scoring remaining Qualified Applicant, then the Committee shall recommend such Qualified Applicant as an additional Applicant for licensure.”
If that Kambi-Fanatics-Penn National bid is next in the rankings for approval but is not licensed, that might lead to a lawsuit. It would be hard to argue the addition of two well-known brands would not grow the market while only dropping the tax rate one percentage point to 50%.
“I would look forward to it, to tell you the truth,” Pretlow said. “I haven’t had conversations with anyone in that regard but that’s always an avenue that people can take.”