Posted on: May 31, 2022, 11:16h.
Last updated on: May 31, 2022, 11:16h.
In just 5 months New York has generated more than one quarter of a billion dollars in tax revenue from sports betting online. This is according to a statement that was released on Tuesday by the governor. Kathy Hochul.
Due to the tax rate of 51 percent on the online sportsbook’s revenues The state has collected $263 million since its first apps were launched in January. 8. Together with the retail betting tax that is imposed on the revenues of betting on sportsbooks at the four casinos licensed by the state to be commercially operated The state has collected nearly $267 million. This is a significant amount. New York has already surpassed states such as Pennsylvania ($253 million) and New Jersey ($229 million).
The first New Jersey-based online applications were launched in the year 2018, and Pennsylvania’s was launched in the year following. The state of Pennsylvania doesn’t have a tax that is comparable to New York’s , and neither does it have the same market size that they draw.
New York Sports Betting Now in the Fast Lane
Senate Racing, Gaming, and Wagering Committee Chairman Joseph Addabbo, D-Queens, stated in a statement that those days when New York “watching other states pass us by” are gone. In addition, he’s looking at the possibility of more funding that will be coming to the state.
The reality that we’ve outperformed every other state in terms of revenue in just six months is a testimony to the excellence of the committed work that is being done to create an authentic product for New Yorkers. New York,”Addabbo added. “This record amount of tax revenue is already being invested in our schools, our youth sports programs and New York’s problem gaming services.”
At the rate it is currently, New York will likely significantly exceed the $357 million of taxes on sports betting it projected for the fiscal year 2022-23 that began with the first day of April. According to the New York State Gaming Commission The state earned $53.1 million in April alone.
Although the tax amount might be reduced during summer however, it’s expected to rise dramatically once football season gets underway in the fall.
‘An Economic Engine’
Assembly Racing and Wagering Committee Chair Gary Pretlow, D-Mount Vernon and said he was delighted to learn of that money that was generated to help with training, sport for youth, and problems with gambling.
“Mobile sports betting is an economic engine for New York,” said the man said.
In the fiscal year that begins this year the state will allocate $5 million for sports-related programs for kids who aren’t served, and another $6 million for problem addiction treatment as well as education and treatment. The remaining funds will go to the education programs of the state.
The release also included information from geofencing solutions provider GeoComply that has found that there are greater than 2.7 million user accounts created in this state with 19.6 million from January.
GeoComply has also tracked over 662 million transactions since. These transactions don’t amount to bets on a one-to-1 basis, however GeoComply claims it’s an opportunity to monitor market activity.
Who’s in New York?
New York used a competitive bid process to select nine operators in the past year to provide betting on sports throughout the state. Of these the nine operators, only BallyBET has not yet launched its application in the state. The ones that are active in the state are BetMGM, BetRivers, Caesars Sportsbook, DraftKings, FanDuel, PointsBet, Resorts World Bet along with Wynn Interactive.
In the week ended May 22 over $7.15 billion was bet online across the state, according Gaming Commission data. The betting sites have generated over $516.6 million in revenues from the bets.
FanDuel is the largest provider in Texas of Delaware, having accepted close to $2.76 billion worth of wagers, and earned $226.2 million in revenue. DraftKings has taken $1.73 billion worth of wagers and generated $120 million in revenues, and Caesars has taken on $1.54 billion in bets , and produced $122.1 millions in wins.
The three operators are responsible for 85 percent of handle revenue and 90.7 percent of the revenues.
Operators Want Lower Tax Rate
Although New York reaps the proceeds however, the operators have openly expressed reservations regarding their tax rates. The operators have reportedly agreed to the rate of 51% in the context of the bidding process for competitive bids however, states’ request to submit proposals made it clear that sportsbooks had no choice to reject it in order to be part of the most legally-operating sports betting market in the United States.
At the annual MoffettNathanson Media and Communications Summit two weeks ago, DraftKings CFO Jason Park spoke to the crowd about how the company believes the tax rate as well as the restriction on deducting promotions result in New York a “tough gross margin state” for betting on sports.
DraftKings isn’t the only one. Both Caesars and BetMGM, the No. 4 operator, with 9 percent of their handle, and 4.5 percent of revenue has cut back on their advertising budgets to draw betting players.
We’ll be taking an extremely conservative approach to New York until the tax conditions improve,” BetMGM CEO Adam Greenblatt spoke during BetMGM’s Investor Day conference call on May 12.
The time when this happens – and the timing of it – is yet to be determined. The two Addabbo as well as Pretlow have introduced bills during the current legislative session, which ended on Thursday, to include more operators and to reduce their tax rates. The bill was not part of the budget of the state, nor did either of them get through their respective committees during this session.
On her own It appears that Hochul is satisfied with the way the arrangement works for New York.
“In less than half a year, New York has become a leader among states in implementing successful gaming policies, with hundreds of millions of dollars going to important programs that will improve the lives of all New Yorkers,” she stated. “I am committed to upholding responsible and effective gaming policies that will move the industry forward and continue to drive our state’s economic growth.”