The Empire State has made it clear that it intends to continue taxing the sports betting vertical with the original 51% tax rate, which was welcomed with grumping approval when companies found out that they would be allowed on the country’s most populous state, and flog their sports betting products there, but is now the source of constant worries about sportsbooks’ long-term fortunes on the market.
Big Tax Is Here to Stay in New York
Many thought that the 51% tax, threatening as it was at the time, would eventually be reduced to a more amenable levy that would allow big players to score more on the market. This, though, is not likely to happen.
Speaking to PlayUSA, Assemblyman Gary Pretlow, one of the longest-standing proponents of regulated gambling in New York, told the publication that the tax rate is very unlikely to change. Pretlow himself has attempted to seek reason with fellow lawmakers and regulators and convince them that a lower rate would make more sense.
But his changing the tune means that the rate may indeed be not moving an inch. Pretlow spent the last decade fighting for regulated gambling in New York. He has been a friend of the poker, casino and sports betting industries and has seen the reason for pushing bills through.
Pretlow proved tireless, bringing and revisiting bills every year to pull these industries from the grips of the offshore industry and make sure that they contribute to the state instead. Of course, the 51% tax rate is not exactly sitting well with the sports businesses that operate in these conditions.
The state is naturally doing well, having collected close to $900 million from tax revenue. However, the sportsbooks that operate in the Empire State seem to be not doing so well. A report by the New York Post has said that sports betting operators have already lost $200 million in the state.
Handle to Contract, Lawmakers Won’t Budge Until Then
Many have reduced their bonuses and promotions and are trying to figure out a sustainable way to operate. One of the ideas that sportsbooks have is to offer slightly less favorable odds, which means that sports fans, especially those who have been around for a while, could seek their good fortunes elsewhere – this means either traveling to another state or worse, turning to offshore markets.
FanDuel’s Christian Genetski expects sports betting handle to begin dropping by 20% annually should the rate remain unchanged, having mostly to do with sportsbooks being unable to galvanize fans as they have nothing worthy to offer with mounting tax challenges, the executive told PlayUSA.
Big taxes are not the problem, the sportsbooks argue – it’s rather unsustainable tax rates that are the issue. Lawmaker intransigence can be remedied, but it might take time for officials to see that the industry is bringing in less money – for as long as it is going strong, legislators are unlikely to show immediate concern.