The entire sports betting industry was anticipating the surge of action that September brings thanks to the start of the NFL season and the windup to the MLB postseason, but in New York that sports gambling market seemed to slow down during the course of that month.
According to the New York State Gaming Commission’s most recent update, that state took in almost $330 million worth of wagers – what’s known as the ‘handle’ – in the first week of September but then that figure dropped by almost $30 million as the month wore on.
That’s during a time when those weekly figures should be surging – especially given that New York had some serious sporting events taking place with the NFL’s Buffalo Bills on national TV twice while the New York Yankees’ Aaron Judge was busy chasing the MLB homerun record.
The odd thing was that during that same time of the downward handle trend in September, state sports betting revenue was as healthy as ever, something the Founder and Chair of Public Policy Group Orrick, Jeremy Kudon attributes to that state’s higher tax rates.
In a recent Tweet, Orrick’s founder Kudon attempted to explain how New York’s sports betting market is adversely affected by the way they tax the sportsbook operators there at the highest rate in the industry, 51%, as well as how they tax any promotional giveaways, saying:
The data clearly shows that a 51% tax rate does NOT work—especially if promo credits are taxed at 100%. As predicted, operators cannot afford to invest in promos, ads, or other tools necessary to develop the NY market—which is leading to materially lower handle figures.
— Jeremy Kudon (@JKudon) September 23, 2022
The argument is that at these tax rates, the operators there cannot afford to offer discounts and freebies to potential customers so which limits how effective they can be in terms of developing the New York state sports betting market and growing their customer base.
And all that equates to the decrease in handle they are seeing there in September, according to Kudon, a theory no doubt shared with all the sportsbooks who operate in New York forced to pay such a steep cover charge just to be a part of that potentially lucrative market.
There have already been failed attempts to adjust New York’s high sports betting tax rates.
Back in March 2022, New York Assemblyman Gary Pretlow introduced a bill to reduce the state’s 51% sports betting tax rate and to increase the number of operators allowed but it failed to pass, and no other legislation has been seriously debated since then.
The next New York legislative session starts on January 4, 2023, so chances are either Assemblyman Pretlow or some other state lawmaker will once again introduce a bill that would adjust the way they handle that market, including tax rates and the number of licenses available.
Meantime, New York’s neighbors are going a different route and charging sportsbooks far less to operate there, with New Jersey at 14.25%, Pennsylvania at 36%, and Connecticut at 18% for online and 13.75% for retail, with only New Hampshire matching New York’s steep 51% rate.
The market should straighten all this out as the new U.S. legal sports betting industry gradually matures, so expect New York to adjust accordingly at some point in the future, and in the meantime Empire State gamblers will continue to enjoy legally putting money on their games.
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Mike Lukas is a retired standup comedian turned freelance writer now living in Dallas, Texas, originally from Cleveland, Ohio. His love for the game of football and all things Cleveland Browns turned Mike into a pro blogger years ago. Now Mike enjoys writing about all thirty-two NFL teams, hoping to help football gamblers gain a slight edge in their pursuit of the perfect wager. Email: [email protected]More info on Mike Lukas
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