In addition, two bookmakers say the Empire State Empire’s profit projections may not come true if it continues its current tax trajectory for sports betting.
A superior tax environment in the Empire State Building can lead online sports sites to take advantage of the bets they accept in New York.
Representatives from DraftKings and FanDuel gave the impression Tuesday at a joint hearing of the New York Assembly and Senate Gaming Committees, which aimed to review the state’s first year of mobile sports betting and its impact on the state budget.
While lawmakers have heard of the good fortune of the online sports market in New York, they have also been warned that good fortune can be fleeting if adjustments are not made to the state’s tax structure. gaming winnings generated through its nine online sportsArray one of the highest levies in the United States.
FanDuel Group President Christian Genetski, presenting a report through experts from Spectrum Gaming Group, said they suspect New York’s handful of sports would fall between 10% and 20% year over year.
“As legal operators try to make the numbers work, not only will marketing and generosity decrease, but they will possibly also be forced to adjust costs in New York,” Genetski told committee members. “That’s what it costs to place a bet, at a higher percentage of maintenance. “
FanDuel is the percentage market leader in New York, however, operators with fewer visitors and contact numbers could eventually pull out of the state, Genetski added. He said this would mean fewer festivals and fewer options, making offshore sports betting more exciting. to gamblers.
New York also does not allow operators to deduct the price of single bets and other promotions presented to players. DraftKings CEO Jason Robins told the committee that this translates to an effective tax rate of more than 70%, as a taxable source of the income earned on a loose bet would come with the price of the loose bet itself.
Operators still want to make more “draconian” decisions to succeed in New York, Robins added. This includes the “significant” relief in the price of promotional credits presented to customers, which the CEO said had already started on a smaller scale. .
“Simply put, we will most likely be forced to offer a much worse price proposition for consumers who place bets in New York,” Robins said. DraftKings be offers in other states and you can locate it in the illegal market. “
One of the reasons those tougher steps haven’t been taken is that traders expect imaginable tax changes, Robins added. The CEO of DraftKings said New York also deserves to consider legalizing online casino gaming as another source of tax revenue.
Still, alarm bells about New York’s tax rate have sounded almost since the state’s mobile sports betting market opened. and in the end accepted through the corporations themselves.
But DraftKings and FanDuel are the two biggest operators in New York, so their words carry weight. In addition, either bookmaker says the Empire State’s profit projections may not come true if it continues its current tax trajectory for sports betting.
“We don’t think this point of economic good fortune is sustainable with the current tax rate of 51 percent,” Genetski said. It peaked, while other states remain on a solid upward trajectory. “
Online sports betting sites in New York have now received more than $16 billion in bets since they were authorized to operate in the state in January 2022. That handful translated into about $700 million in taxes for the state, which levies a 51 percent rate on gross gambling. revenue. The state also earned $200 million in licensing fees.
But getting lawmakers and the public to settle for a tax break for bookmakers will be a hard sell. There is also some skepticism about the decline of the online sports betting market in New York, which is the largest in the US. The U. S. government has barely begun offering year-over-year comparisons given its opening in January 2022.
“In my opinion, there’s no basis to say those numbers are suffering right now, so we want to replace that,” Sen. Joseph Addabbo Jr. said at Tuesday’s hearing. “That’s a very difficult argument to make. “
Even so, there would possibly be an appetite for additional adjustments to gambling legislation and regulations in Albany and the state gambling commission, such as stricter marketing regulations. Several gambling-related laws have been introduced this year, adding an invoice requiring all sports classified ads to include warnings about the potentially addictive effects of gambling.
Addabbo, chairman of the Senate gaming committee, said the state’s functionality so far lays a “foundation” for sports betting and mobile gaming to pass in the state in the future, adding stimulating thinking about legalizing online casinos in the state. But Addabbo said lawmakers will first have to be aware of two things, namely that they can’t sit idly by if adjustments are needed and that they will have to perceive the dangers of gambling addiction.
“We have to be prepared to make sure that we’re giving New Yorkers in this state the most productive product possible, the most productive product in the country,” Addabbo said. “We want to be in a position to make those adjustments and innovations whenever you want and when the opportunity arises. “
Addabbo introduced a law in January that would expand the state’s sports market to 14 operators by the end of January 2024 and 16 operators by the end of January 2025.
The expansion would also be accompanied by a tax cut. The law proposed allowing operators to deduct loose bets and other promotions from their revenue stream and would reduce the state tax rate for the online sports revenue stream to just 25% when all 16 or so operators are licensed. Even so, new operators would be a subject at a $50 million licensing fee.
There is no guarantee that the Addabbo bill will pass anywhere; He introduced a similar law in the last legislative session. Getting lawmakers to buy will require explaining to them why bookmakers deserve a lighter tax burden, and why they don’t will jeopardize the continued source of income from online sports betting.
“While there has been an exciting start for mobile sports betting in New York City, there is still room for improvement,” the bill’s justification states. “This law would explain and update legislation governing existing operations and direct the Gambling Commission to more cellular sports betting licenses so that we can continue to grow and the market. “