Online sports betting operators in New York desperately need legal online casinos and poker to stay afloat in the state. Executive from multiple NY online sportsbooks have criticized the state’s 51% tax rate, which makes it a daunting challenge to create a sustainable long-term business.
“I think the sooner New York gets its act together with that, the better, because the existing sports betting operators in New York are dying on a vine. It’s just not sustainable at that tax rate,” New Jersey-based gaming lobbyist Bill Pascrell III of Princeton Public Affairs Group told PlayNY.
“And without being able to complement it with some iCasino and poker.”
Lawmakers have attempted to legalize NY online casinos, online poker
Sen. Joe Addabbo, chair of the Senate Racing, Gaming and Wagering Committee, introduced legislation to include online casino gaming and poker late in the session as a way to get the conversation started. Addabbo, who is running for re-election in District 15, hopes to make NY online casino gaming and NY online poker the featured gaming item for next year’s state budget.
Addabbo’s iCasino bill included a 25% tax rate with promotional play deductible. The bill projected that New York would receive an estimated $475 million annually in tax revenue. Plus $150 million in one-time licensing fees from casinos, operators and independent contracts looking to conduct business in the state.
Gaming industry executive Chris Krafcik, though, believed those numbers would change.
Responding via Twitter to a report by Brad Allen of Legal Sports Report, Krafcik wrote:
“IMO, NY OSB operators get OSB tax reform (likely in the form of capped promo deductions) as part of a future NY iGaming legislative package in which some of those same operators (e.g., BetRivers) agree to a ~50-55% tax on iGaming slots revenue + big upfront license fees.”
NY sports betting has boomed, but tax rate has crushed operators
Legal online sports betting has generated a record $276 million in tax record for New York from Jan. 8 launch through June 5. Lobbying and legislative efforts to get a tax reduction via operator expansion were rejected during the NYS legislative session.
New York online sportsbooks — many of whom spent significantly on marketing and promotional spend in order to acquire meaningful market share — have so far not made their exact losses public. Although, many have shown overall losses in their quarterly earnings calls, respectively.
Through June 5, NY sportsbooks posted $7.7 billion in handle. That has led to $541.2 million in total gross gaming revenue — of which 51% goes to the state.
With NY exceeding $1 billion in handle in each of the first five months since launch, New York has no incentive to make any tax rate changes in the short term. And after a slower period during the summer, business should boom again in the fall once NFL season begins.
A bill from Assemb. Gary Pretlow, which didn’t pass, had called for the Empire State to go from nine NY sportsbooks to no fewer than 14 by Jan. 31, 2023 (which would lower the tax rate from 51% to 35%) and no fewer than 16 by Jan. 31, 2024 (which would lower the tax rate from 35% to 25%).
Addabbo has said that lawmakers would revisit a myriad of NY online sports betting topics later in the fall.