Will 51% Tax Rate For NY Online Sportsbooks Change? Maybe Not

Written By Mike Mazzeo on March 14, 2022
51% NY Sports Betting Tax Rate Not Changing

New York’s online sports betting operators might not be getting a tax break after all.

Sen. Joe Addabbo confirmed via text to PlayNY that sportsbooks would still pay a 51% tax rate even if NY online sports betting increased from nine betting apps to 14 or 16.

“That’s my understanding based on the language,” Addabbo wrote.

This is the exact wording in the senate one-house budget:

For any applicant licensed after January first, two thousand twenty-two, such tax rate shall be set at the same amount that is applicable to the previously licensed applicants.

Here is language in the assembly one-house budget:

Any additional platform providers awarded licenses must also agree to pay the same tax rate as those platform providers that were initially awarded licenses by the commission.

It seems massive NY sports betting tax rate here to stay

The 51% tax rate on gross gaming revenue from NY online sportsbooks represents the highest in the US. Operators have made known the difficulties they face building sustainable, profitable business enterprises at 51%. But the state has made significant tax revenue thus far.

It had appeared based on a bill amendment introduced by Assemb. Gary Pretlow to add more online sports betting operators and include more minority-controlled businesses that the tax rate would change as a result based on the matrix used by the New York State Gaming Commission.

Pretlow’s bill amendment introduced to the Assembly had called for the Empire State to go from the current nine betting apps in New York to no fewer than 14 by Jan. 31, 2023. That would decrease the tax rate from 51% to 35%. The industry would then expand to no fewer than 16 NY sports betting operators by Jan. 31, 2024. This would lower the tax rate to 25%.

It’s plausible that sportsbooks like Fanatics, Bet365 and Penn National/Barstool Sports that did not have their bids accepted by the NYSGC could want to make a second attempt at coming into NY. But would they want to do so at 51% while facing stiff competition? After all, FanDuel, DraftKings, Caesars and BetMGM have amassed 95% of the market share.

“I’d be surprised if the operator increase happens with no tax adjustment,” one industry source told PlayNY.

New York state budge due April 1

Addabbo had agreed to matching legislation in the Senate, assuming that the numbers added up with the state not losing any tax revenue. So far, NY has received $121.2 million in tax revenue generated by $3.5 billion total in handle from Jan. 8 to March 6.

However, nothing has been finalized. The state budget is due on April 1.

“I think because the most important and obvious point is that tax rate doesn’t change,” Addabbo told PlayNY earlier Monday. “But this is the start point, the negotiation.

“I tell people — whether that be my constituents or people in the industry — ‘Listen, don’t freak out. This is just a process. This is the senate’s version of the budget, as is the assembly’s version of the budget, as is the Governor’s Executive budget in January. And from the three — with very little additions that are not mentioned — this is where the final budget gets materialized. So the idea here is this is a starting point, this is a discussion point, and so we’ll see how it goes.”

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Mike Mazzeo

Mike Mazzeo is a contributing writer for PlayNY, reporting on legal sports betting in New York while covering the potential legalization of NY online casinos and poker. He previously wrote for ESPN, the New York Daily News and The Ringer, among others.

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