The trouble with a high tax rate for mobile sportsbook operators in lucrative New York state is that only the rich fellas can afford to field a team.
The cost of doing business is to pay 51 percent of gross gaming revenues (GGR) to the government of New York, and with the high cost of advertising for customers not already signed up by DraftKings, FanDuel, BetMGM and Caesars among others, making a buck anytime soon is unlikely, according to Sports Handle.
The Senate’s Mister Sportsbook, Joe Addabbo, has an answer he’d like to introduce you to. Senate Bill 1962 would add five mobile sportsbooks to the current nine, a move that would kick in a decline in the tax rate. The changes would be earmarked to January 1, 2024, with another couple operators by January 1, 2025. The tax rate would fall from 51 percent to 35 and then to a more manageable 25 percent.
Another advantage: the bill would allow sportsbooks to deduct promotional bets from the GGR they report to the state for tax purposes. But the Senate bill would double the license fee to $50 million from the amount paid by the original nine sportsbooks: FanDuel, DraftKings, Caesars Sportsbook, BetMGM, WynnBET, PointsBet, BetRivers, Resorts World, and Bally Bet.
“While there has been an exciting start to mobile sports wagering in New York, there is still room for improvement,” Addabbo said in a bill summary. “This legislation would direct the gaming commission to issue additional licenses so that we can continue to grow and improve the market.”
Sound good? A similar push failed last year. Assemblyman J. Gary Pretlow introduced a bill to increase the number of licenses to 14 by this month and 16 by January 2024.
The tax rate would have ticked down to 50 percent with 10 to 12 operators, fall to 35 percent with 13 or more, and more than 15 operators would have triggered a 25 percent tax rate. Pretty much the same bill, but it failed.
Taxes aside, Pretlow and Addabbo said the original nine also failed to deliver any ethnic diversity in their business.
“The way that the rollout was defined by Governor Andrew Cuomo kind of eliminated anyone except the biggest players,” Pretlow told Sports Handle last summer.
Addabbo told Sports Handle in July that he would like to see the tribes involved.
“Really, what they’re looking for is respect and to work with the administration,” Addabbo said. “I would have thought they would have had a better time and better possibility of obtaining that respect under the Hochul administration than under the prior administration.”
How much of a hit to the state coffers?
“I think it will increase the sustainability of the market, but the tradeoff is likely less tax revenue, at least in the short term,” said policy analyst Ulrik Boesen of the nonprofit Tax Foundation.
In other New York state news, two lawmakers introduced legislation to require gambling and sports betting ads include warnings about the potentially addictive nature of the activity.
Senate Bill S1550, introduced by Luis R. Sepúlveda and Leroy Comrie on January 12, would also require the gambling hotline number to accompany all ads.
Ohio passed similar rules. And New Jersey ads include the hotline number as well.
The issue will receive increased emphasis as the state grapples with selecting the three downstate casino licenses.
Addabbo told Sports Handle he and Pretlow, members of the gaming commission and leaders in the addiction field should hash out potential rules changes.
“… this is an important issue, one addressed at the time with 12 safeguards and protocols and money set aside to treat the pitfalls of addiction,” Addabbo said.
