One of the hot-button topics in New York at the turn of the year was the taxation rate for the sports betting industry and specifically, its mobile betting branch. Now, a group of state lawmakers is looking to tweak the numbers and give the industry more in the way of breathing room, add fresh licensees, and reduce tax rates confident that the highly-competitive market would yield even stronger results.
Adjusting New York State’s Sports Betting Tax Rate
Any newcomer would possibly have to foot a hefty bill at the very start. Regardless, Senate Racing, Gaming, and Wagering Committee chairman Joseph Addabbo filed a new bill last Friday, S8471, which comes to support another legal move by Assembly Racing and Wagering Committee chairman J. Gary Pretlow filed an amendment to his A8658A last Thursday.
Pretlow and Addabbo are the two most prominent supporters of the gambling industry in New York have tried for almost a decade to see sports betting and casinos come to fruition in the Empire State. Now that they have, they are just as busy trying to fine-tune legislation to the point where it allows businesses and consumers to have the best industry conditions possible.
So, what’s the purpose of their bills? Mostly, they want to see the tax rate on sports betting decrease from its current 51% down to 35%. This should come with a condition whereby there are 14 operators in the state, a condition that could be fulfilled by January 31, 2023. The bills also propose the tax rate to drop to 25% should there be 15 operators. The maximum number of licensee holders will be 16 under the proposals and the implementation schedule is set for January 31, 2024.
More Opportunities for Minorities, Better Diversity in Sports Betting
Presently, the only operators in the New York State market are the big companies that can afford to foot the 51% tax rate and the hefty licensing fee. For others, such as Barstool Sports, the doors remain shut. Barstool, though, failed to pass regulatory muster after its founder, Dave Portnoy, was accused of sexual misconduct by several women.
Other bidders that missed the mark included Fanatics, the online sports retailer which is planning to move in on the sports betting space as well. With Fanatics not making the cut, there has been criticism towards the New York Gaming Commission, the state’s regulatory body, for not focusing on more minority business representatives in sports betting.
The bills also seek to exclude any bets that participants made using promotional offers, such as free bets or match bets, which should reduce the tax burden operators carry right now. If sportsbooks end up reporting gross revenue losses, those could then be carried over to the next month for additional leeway.
This is done not so much to help sportsbooks become more profitable, but rather to help them remain competitive in the long term. Some have already had to reduce the size of the offers they have been running, including Caesars Sportsbook which has scaled down its $3,000 deposit match bonus.
How Do the New Bills Change the Game?
As per S8471 and A8658A, there are changes done to the licensing fees. Operators in New York have to pay $25 million to acquire a license for the next ten years and agree to a 51% tax rate. As a reminder, New York was the US state to reach the $2-billion threshold the quickest.
Based on the new bill proposals, the entry fee will go up to $50 million but at the same time, the tax rate would go down. It’s not yet clear if the $50 million fees would only apply to new operators or whether they would be backdated to apply to the companies already on the market.
Meanwhile, New York may also have to debate whether iGaming should be made a part of the offer. Addabbo pitched another bill last week, SB8412, which proposes that interactive gambling is launched in the state.