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New York will not budge on 51% tax rate for sports betting sites

New York sports betting hearing

Lawmakers for the state of New York have affirmed that the state has no plans of reducing the mobile sports betting tax currently set at 51% despite pleading from operators.

However, this is to the chagrin of mobile sports betting operators in the state who see the tax rate as exorbitant and leaving no room for business sustainability.

Mobile sports betting went live in New York in 2022 with a resounding success following after it concluded its first year. The state recorded a $16.2 billion handle, $1.36 billion in total revenue and $693 million in tax revenue. When licensing fees are added, the state government goes home with a total of $909 million.

However, leading operators in the state FanDuel and DraftKings have protested the tax rate arguing that it was not sustainable. At a gaming committee hearing set up to review mobile sports betting in the state, DraftKings CEO Jason Robins and FanDuel President Christian Genetski told Assemblyman Gary Pretlow and Senator John Addabbo, both lawmakers in charge of gambling policy, that the state should consider reducing the tax rate.

They reasoned that despite the success recorded, the tax rate will stifle business growth and significantly reduce the amount of money operators are willing to spend as incentives for playing. They added that the tax rate will create a hostile environment for business which will then lead to a “pullback of investment by operators in the market”.

Genetski and Robins added that continuing with the tax rate will lead to worse odds and fewer promotions for bettors in the state which can lead to bettors traveling across state lines to get favourable bets. They also chipped it in that reducing the tax rate will eventually pay off for the state as the more the operators make money, the more the tax they remit to the government.

However, both Assemblyman Gary Pretlow and Senator John Addabbo are not convinced. For Sen. Addabbo, the operators saw what they were getting into when they decided to enter the New York market and so cannot demand to have the tax rate reduced.

“If they all balked and said ‘We can’t do this, we’re not participating in sports betting in the state,’ that might give them some leverage,” Pretlow said. “But they agreed to this by their participation, they’re still doing it and they’re making money.”

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