New York online sports betting operators will likely still be paying a 51% tax rate in 2023.
Despite their constant complaining, Assemb. Gary Pretlow told LSR he’s “pretty sure” the controversial online NY online sports betting tax rate will stay the same next year.
Last session, Pretlow introduced legislation that would have reduced the tax rate via an increase in the number of operators. But that bid proved unsuccessful.
“I tried to make it go away because I thought (the tax rate) was exorbitant,” Pretlow told LSR. “But the operators are doing it, so I’m not going to take from education for them to make more money. “So I’m pretty sure it will (stay).”
NY sports wagering making dough
From Jan. 8-Dec. 18, NY online sports betting operators have combined for $15.5 billion in handle, leading to $1.3 billion in total gross gaming revenue and a US record $660.4 million in tax revenue.
NY has also set a US monthly tax revenue record in each of the past three recorded months (September-November).
The state is currently on pace to surpass Gov. Kathy Hochul’s projection of $615 million in tax revenue from online sports betting for FY2023 (April 1, 2022-March 31, 2023).
98% of all tax revenue from online sports betting goes to education funding in the state.
Operators still complain
Former Gov. Andrew Cuomo ultimately gave in on sports betting with the idea the state would make a ton of money.
While that idea has become reality, operators argue that the tax rate has made the path to profitability nearly impossible in the Empire State.
Nevertheless, they willingly agreed to the 51% tax rate in order to gain access to the NY market.
Who is complaining
“Well, the tax rate is ridiculous,” Caesars CEO Tom Reed told LSR. “New York chose a big cut of a smaller pie than they could’ve had in sports betting. They’ll have another bite at that with iGaming. California would have the ability to choose a smaller cut of a much bigger pie. I think the state would end up better off.”
“Players would never continue to play if the house always won, and the house cannot continue to play if it’s always going to lose,” BetMGM CFO Gary Deutsch said.
Previously, FanDuel’s Peter Jackson and DraftKings’ Jason Robins were among other execs who made pointed remarks. But, so far, lobbying and legislative efforts at a reduction have proven unsuccessful.
Promo deductions likely a no-go
There has been some talk that perhaps allowing for promotional deductions could be a compromise of sorts.
“That’s probably not going to happen,” Pretlow told LSR.
On that front, it’s worth noting that Sen. Pete Harckham recently introduced a vague bill amendment meant to confront what he claims to be “predatory” bonuses in online sports betting.
Pretlow wants expanded betting menu
NY sports bettors can potentially look forward to an expanded menu of wagering options.
Pretlow told LSR he plans to introduce legislation in the upcoming session that would allow for bets on individual player award futures i.e. MVP, Coach of the Year, Cy Young.
“I want to add more opportunities to get closer to what they do in (New) Jersey,” Pretlow told LSR. “There are too many bets you can’t make. I want to include those type of things.”
Currently, NY bettors are prohibited from betting on any award futures that require a vote.
Pretlow said he was “pretty sure” that legislation would pass given the potential increase in handle it would create.
More on NY sports betting
Pretlow would like to revisit the legislation to add in-stadium betting kiosks. In addition, he’s hoping to bring off-track betting (OTB) parlors back to NYC.
NY is currently going through the licensing process for a downstate casino. A request for applications must be issued by Jan. 6. Proposals should include the likes of Citi Field-Steve Cohen-Hard Rock and Times Square-SL Green-Jay-Z.
“There’s a lot of pushback for Manhattan,” Pretlow told LSR. “I’m not gonna say it’s not gonna happen but it’s an uphill battle.”
Sen. Joe Addabbo will also reintroduce an iGaming bill for the upcoming session.