New York’s online sports betting tax revenue far exceeds expectations

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Posted: May 31, 2022, 11:16 am.

Last update: June 1, 2022, 11:10 am.

In less than five months, New York has generated more than a quarter of a billion dollars in taxes from online sports betting. This is according to a statement issued on Tuesday by Governor Kathy Hochul.

Hochul
New York Gov. Kathy Hochul is wearing a Brooklyn Nets custom t-shirt during a news conference on November 2, 2021 at the Barclays Center. On Tuesday, Hochul announced that New York has become the top state for sports betting tax revenue, generating more than $ 265 million in taxes since online sports betting applications were launched in the been in January. (Image: Office of Governor Kathy Hochul / Don Pollard)

Thanks to the 51% tax rate on online sports betting revenue, the state has received $ 263 million since the first apps were available on Jan. 8. When combined with the 10% sports betting retail tax on sports betting revenue located on the four commercial licenses in the north of the state. casinos, the state has raised more than $ 267 million. This means that New York has already surpassed states like Pennsylvania ($ 253 million) and New Jersey ($ 229 million).

New Jersey’s first online apps were launched in 2018, while Pennsylvania was launched a year later. Neither state assesses a tax close to that of New York, nor do they have the same size of market from which to extract.

New York sports betting now in the fast lane

Senate Race, Games and Betting Committee Chairman Joseph Addabbo, D-Queens, said in a statement that the days of New York “watching other states pass” are over. In addition, he hopes that even more funding from the state will arrive.

The fact that we have already surpassed all other income states in less than six months is a testament to the quality of the work dedicated to delivering a credible product for New York residents. ” said Addabbo. “This record amount of tax revenue is already being invested in our schools, our youth sports programs, and New York’s problem gambling services.”

At its current pace, New York is likely to far exceed the $ 357 million in sports betting tax revenue it projected for fiscal year 2022-23, which began on April 1st. According to data from the New York State Gaming Commission, the state received $ 53.1. million in April alone.

While the amount of tax may go down a bit during the summer months, it is expected to increase significantly once the football season begins in the fall.

“An economic engine”

Assembly Racing and Betting Committee Chairman Gary Pretlow, D-Mount Vernon, said he was pleased to see the amount of money generated for education, youth sports and gambling issues .

“Mobile sports betting is an economic engine for New York,” added.

Starting this fiscal year, the state will allocate $ 5 million to sports programs for disadvantaged children and $ 6 million to educational and problem-solving gambling programs. The rest will go to the state’s educational programs.

The Hochul statement also cited data from geofencing solution provider GeoComply, which has determined that there have been more than 2.7 million unique user accounts established in the state of 19.6 million people since January. .

GeoComply has also tracked more than 620 million transactions since then. These transactions do not amount to one-to-one bets. But the company says it’s a way to track market activity.

Who is in New York?

Last year, New York used a competitive bidding process to approve nine operators to offer state-of-the-art sports betting. Of these, only BallyBET has not yet launched its app in the state. Assets in the state are: BetMGM, BetRivers, Caesars Sportsbook, DraftKings, FanDuel, PointsBet, Resorts World Bet and Wynn Interactive.

During the week ending May 22, more than $ 7.15 billion has been wagered online in the state, according to data from the Gaming Commission. Sports betting has generated more than $ 516.6 million in revenue from these bets.

FanDuel is the largest operator in the state, with nearly $ 2.76 billion in bets and $ 226.2 million in revenue. DraftKings has accepted $ 1.37 billion in bets and grossed $ 120 million, and Caesars has managed $ 1.54 billion in bets and generated $ 122.1 million in winnings.

These three operators account for 85% of the handle and 90.7% of revenue.

Operators want a lower tax rate

While New York is reaping the benefits, operators have publicly expressed concern about the tax rate. These operators did accept the 51% rate as part of the competitive bidding process. But the state’s call for proposals essentially gave sports betting no choice but to accept it if they wanted the opportunity to enter the country’s largest legal sports betting market.

At MoffettNathanson’s annual media and communications summit two weeks ago, DraftKings chief financial officer Jason Park told the audience that the company said the tax rate and inability to deduct for promotions make New York a “hard gross margin state” for sports betting.

DraftKings is not alone. Both Caesars and BetMGM, the No. 4 operator with 9% of the handle and 4.5% of revenue, have reduced their promotional spending to attract bettors.

We will take a very conservative approach in New York until the fiscal environment improves. “ BetMGM CEO Adam Greenblatt said during the company’s Investor Day conference on May 12th.

When that happens, or if that happens, it remains to be seen. Both Addabbo and Pretlow introduced bills in this legislature, which ends Thursday, to add more operators and reduce the tax rate. This was not included in the state budget, nor did the bill come out of their respective committees in that session.

For his part, it seems that Hochul is pleased with how 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 earmarked for major programs that will improve the lives of all New Yorkers.” she said. “I am committed to maintaining responsible and effective gambling policies that will advance the industry and continue to drive our state’s economic growth.”

2022-05-31 07:00:00

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