Bill: Tax Rate For New York’s Downstate Casinos Will Be Determined Via Bidding Process

Written By Mike Mazzeo on February 23, 2022 - Last Updated on February 25, 2022
NY Downstate Casino Selection

A bill in the New York State Senate was amended Tuesday to outline selection criteria for the three downstate casino licenses, while stating that the New York State Gaming Commission will determine the tax rate following a competitive bidding process.

Sen. Joe Addabbo said in January that the expedition of the three downstate NY casino licenses has the potential to bring in $1.5 billion in revenue for the state, additional education funding and improvements to problem gambling programs.

Selection criteria for downstate NY casinos

The four upstate commercial casinos in New York averaged a 39% tax rate in 2020, according to a report by Spectrum Gaming.

According to Senate Bill 8009, applicants will be selected based on a number of factors including, in part:

  • Realizing maximum capital investment exclusive of land acquisition and infrastructure improvements
  • Maximizing revenues received by the state and localities
  • Providing the highest number of quality jobs in the gaming facility
  • Offering a reasonable and feasible construction schedule to completion of the full gaming facility
  • Demonstrating the ability to fully finance the gaming facility
  • Carefully considering local views and consulting with appropriate local governments

Existing video lottery terminals (VLTs) Resorts World NYC (Aqueduct) and MGM Empire City (Yonkers) have received significant backing from local policymakers to become full-fledged casinos. Certainly, those properties remain attractive due to speed to market.

What about out-of-state casino companies?

Several other casino corporations have also expressed interest. Hard Rock chairperson Jim Allen recently told the Associated Press that the corporation has three potential sites on which it could build a casino in New York City but declined to divulge specifics. But Caesars’ CEO Tom Reeg said it’s unlikely his corporation enters the fray.

“New York, how do I answer this politely — New York is a difficult regulatory state. I think it’s going to be extremely expensive to build there. I think it’s going to be an extremely expensive license fee. And I think there’s a likelihood that you’re going to have to solve some other problem for the city in addition to creating the jobs that you do in building a casino,” Reeg said.

“So it’s not going to be enough to pick a site, build a casino, create the jobs and generate a return. There’s going to have to be other investment there as well. So I would say on our balance sheet it’s extraordinary unlikely that we make a material investment into New York land-based.”

More casinos could lead to lowered NY sports betting tax

The Empire State has already benefited greatly from the 51% tax rate waged on mobile sportsbooks in New York. From Jan. 8 to Feb. 13, the state received a staggering $78.5 million in taxes. But it remains unclear whether operators can become profitable at that rate — the highest in the country — long-term.

Read more: How Can 51% Tax Rate Be Lowered? Start With Adding Online Sportsbooks In New York

Nevertheless, Assemblyman Gary Pretlow has introduced a bill that would prohibit NY online sports betting operators from asking for a tax rate reduction. Pretlow has said he wants to make sure that operators can’t try to change the tax rate. Casinos did it before, lowering the rate from 37% to 30%).

“I’ve been experiencing this whole bait-and-switch for too long, and I’m tired of it,” Pretlow said. “I always say, if you make your bed, you lie in it.”

Based on the NY matrix, one way to potentially reduce the tax rate would be to add four more operators. Going from nine to 13 sportsbooks would allow the rate to drop from 51% to 35%.

Photo by AP / Kathy Kmonicek
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Mike Mazzeo

Mike Mazzeo is the Lead Writer for PlayNY, arriving after covering several of New York's professional sports teams in a variety of roles for the past decade. Previously, he served as a beat writer and columnist covering the Brooklyn Nets (ESPN) and New York Yankees (New York Daily News). Mike also covered both the MLB and NBA nationally for Yahoo Sports. In addition, he served as a general assignment reporter for ESPN NewYork.com. He has also had bylines in the New York Times, New York Post, Newsday, Forbes and The Ringer. With PlayNY, Mike brings extensive coverage and unique story angles to what is projected to be one of the biggest and most lucrative online sports betting markets in the country. It's been an arduous and confounding process to get here, but 20 million New Yorkers (many of them die-hards) are now legally able to bet on their favorite sports teams across the state via online and mobile platforms.

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