A bill has been introduced in New York that would increase the number of online sportsbook operators in the market, reducing the state’s online sports betting tax rate as a result.
Senate bill S1962 – sponsored by Sen. Joe Addabbo – was presented to the state’s Senate Committee for Racing, Gaming, and Wagering on Jan. 17.
The bill would permit the state’s regulator – the New York State Gaming Commission – to license more online sportsbooks in the state over the next two years (14 by Jan. 31, 2024, and 16 by Jan. 31, 2025), which would result in a decrease in the tax rate.
S1962’s summary states:
Amends the definition of sports wager to include other things of value; changes the licensing requirement for mobile sports wagering operators; provides the state shall by no later than January 31, 2024 have fourteen operators and by January 31, 2025 have sixteen operators; provides tax rates shall be determined based on the number of operators.
Currently, New York has only nine online sportsbooks, but one of the highest tax rates for online sports betting in the US at 51%.
Many operators have expressed their disapproval of the high tax rate, including FanDuel, DraftKings, Caesars Entertainment, and BetMGM. In May last year, BetMGM said they would be reducing their presence in the state due to the “irrational” tax rate.
If S1962 were to pass, the rate would come down depending on the number of online sports betting operators in the state.
With 10-12 operators, the tax rate would be 50%. 13-14 operators would bring the tax rate down further to 35%, while 15 or more operators would make the tax rate 25%.
Legislators may be reluctant to pass this bill, as with the 51% tax rate, New York’s online sports betting market paid $693.1m in state taxes in 2022, with operators generating $665.9m in revenue.
Assemblyman Gary Pretlow introduced a similar bill amendment in the state’s assembly in March last year, which was matched by Addabbo in the senate, but it failed to pass.
S1962 is currently in the ‘in committee’ phase and is yet to be voted on. If passed, the law would come into effect immediately.
Last June, an SBC/VIXIO Gambling Compliance survey revealed that 21% of stakeholders believe that high tax rates and license fees as the policy issue most likely to affect US market expansion in future years, while 12-14% believe it will result in a slower rollout of igaming.
Almost 28% of participants also selected the spread of New York’s high-tax model to other states as the most concerning from a list of hypothetical regulatory events.