Legalized online sports betting in New York is moving toward a conclusion. And that conclusion could come with an effective tax rate of 64% on sports betting revenue in the state, per new information from state regulators.
That would be by far the highest tax rate for sports betting anywhere in the US.
PlayNY confirmed that New York regulators have determined a final tax rate matrix that applicants must be able to meet. The advancement was first reported by the Buffalo News. Later, the newspaper’s Tom Precious revealed the matrix for the first time:
Applicants that do not agree to the final tax rate will be disqualified from securing a license from the New York State Gaming Commission. The NYSGC has until before Dec. 6 to select applicants for licenses.
Details on tax rate bids
Tax rates in the redacted bids include 50% for the FanDuel, DraftKings, BetMGM and Bally’s consortium, and 51% for the Caesars, PointsBet, Resorts World, Rush Street and WynnBet consortium. Fanatics, a compelling player in the process, did not have a tax rate in its consortium alongside Barstool/Penn National.
The scoring system for applicants is based on 75 points. All applicants who submitted bids featuring tax rates of 50% received 20 points, with each % they go above 50 worth one additional point.
There are 14 prospective operators that submitted bids, meaning the matrix from the NYSGC paints several potential scenarios:
- A limited number of sportsbooks at a 64% tax rate or slightly lower.
- A robust number of sportsbooks at a 50% rate or slightly higher.
- All bids are accepted at a 35% tax rate.
It’s important to note that bid participants agreeing to the above matrix is not a guarantee of inclusion in the NY market. It just allows the state to accept a bid. The state could choose all of the bids or just one.
NY sports betting timeline
NY state lawmakers are optimistic that legalized online sports betting will be fully launched by Super Bowl LVI on Feb. 13, 2022, with the first bet being placed during the NFL playoffs in January.
There is pressure for NY to be up and running as soon as possible given that neighboring New Jersey just became the first state to ever record $1 billion in handle during September.
NY believes it can will surpass that number given its population size and fan base, but the headwinds of regulation and a high tax rate could mute those ambitions.