Sen. Joe Addabbo has proposed a bill that could turn the tides of a New York sports betting market that is on the decline.
Last month, Addabbo introduced bill S 1962. Its goal is to increase the number of sports betting operators in the Empire State while lowering the tax rate. This would bring more competition for New York’s nine active sportsbooks, but they’d also enjoy a diminished tax rate. The NY sports betting tax rate is currently set at 51%.
Here’s how Addabbo justified the move in the bill summary:
“New York State recently authorized mobile sports betting in New York and licensed nine operators. While there has been an exciting start to mobile sports wagering in New York, there is still room for improvement. This legislation would clarify and update the laws governing the current operations and would direct the Gaming Commission to issue additional mobile sports wagering licenses so that we can continue to grow and improve the market.”
Breaking down NY sports betting bill S 1962
Bill S 1962 promises a fluctuation in the sports betting tax rate depending on how many operators are added to the market. Addabbo’s plan is to increase the number of operators to 14 by Jan. 1, 2024. Then by New Year’s Day 2025, two more sportsbooks would join the market, raising the total to 16.
The bill also proposes a sliding tax rate scale based on how many operators are in the market. If there are 14 operators, the tax rate on gross gaming revenue (GGR) would fall from 51% to 35%. If there are 15 or more operators, the rate would be 25%.
Another stipulation of the bill would allow operators to exclude promotional bets from the GGR reported for taxes. But, the licensing fee for new operators would jump to $50 million.
The downfall of Addabbo’s proposal
An increase in gaming operators would be reason for celebration for New York sports bettors. Who wouldn’t want more options when picking a sportsbook to join?
But the clear downfall would be less tax revenue for the state in the short-term. But, Addabbo’s plan of adding more sportsbooks at a lower tax rate would make joining the New York market more attractive for new gaming operators.
The senator told PlayNY before, and he continues to emphasize, that any conversation regarding a tax rate decrease would have to include a convincing argument that it will not only improve the product for users, but also better benefit the state.
“Until that argument is made,” Addabbo told PlayNY last month, “an argument against what’s happening right now is hard to make. It’s so successful. But I’ll speak for myself, I’m all ears. I’ll entertain any proposal and look at and examine anything forwarded to me. But somebody has to make that argument.”
Still, if all goes as planned with this bill proposal, a substantial drop in the 51% tax rate would eventually even out if more gaming operators enter the market. But who knows how long that would take.
Something needs to change in NY sports betting market
Earlier this month, FanDuel President Christian Genetski and DraftKings CEO Jason Robins spoke at a hearing with the Committee on Racing, Gaming and Wagering. The two told lawmakers that NY’s 51% sports betting tax rate has stunted the market’s growth.
Genetski and Robins said if the tax rate isn’t lowered, drastic measures would need to be taken to stay profitable. Robins said DraftKings would start offering “worse odds” in New York. Robins told the committee FanDuel has already started taking action to make money in the NY market. He said:
“In fact, we’re now investing 50% less in New York.”
Change is necessary to revitalize the New York sports betting market. If something doesn’t shake, New York sports bettors will be the ones that suffer.