NY Sportsbooks Tell Lawmakers Success “Unsustainable” Due to 51% Tax Rate

Written by: Mike Lukas
Updated February 2, 2023
4 min read
  • At Recent Hearing, NY Sportsbooks Admit They Are “Shrinking” Due to 51% Tax Rate

  • DraftKings CEO Calls For 36% Tax Rate in New York to Prevent “Draconian Measures”

  • NY Sen. Addabbo Proposed Bill to Lower Rate to 25% Once NY Gets 15+ Sportsbooks

NY Sportsbooks Success Unsustainable

At a Recent Hearing, NY Sportsbooks Admit They Are “Shrinking” Due to 51% Tax Rate

Right from the start, the state of New York went big with their legal sports betting market including the 51% tax rate they charge sportsbooks to operate, except those companies are now saying that the gambling surcharge is too steep to sustain the current profit level of that market.

Those complaints and “gloomy pictures” came from leaders of DraftKings and FanDuel during a recent hearing with state lawmakers in Albany that lasted almost four hours, a needed chance to air their frustrations, according to reporter Heather Fletcher of NY Sports Day (NYSD).

Retail sports gambling in New York has been legal since 2019 and the mobile market opened up there in January 2022, and since then those bettors have generated a $16.7 billion handle which has created $1.4 billion in sportsbook revenue and $695 million in taxes for the state.

Impressive numbers, however at that hearing operators told state lawmakers “that revenue is unsustainable at the current tax rate,” according to NYSD, with FanDuel President Christian Genetski saying betting is down 20% since right after NY mobile sportsbooks launched.

DraftKings CEO Jason Robins said New Jersey’s operation is growing faster than New York’s, and that the solution for growth lies in lowering that rate to attract more operators to the market.

DraftKings CEO Calls For 36% Tax Rate in New York to Prevent “Draconian Measures”

There is no shortage of suggestions on how to revamp the taxing structure of New York’s legal sports betting market, but all of them involve lowering the 51% tax rate (the highest in the U.S.) to something more reasonable, with each solution including a different set of factors.

Fletcher reports that DraftKings CEO Robins said that if New York drops its sportsbook tax rate to 36%, which is what operators pay in Pennsylvania, his company may not have to take “draconian” measures to remain profitable in the state, a subtle but effective threat.

Those measures include New York sportsbooks offering “worse odds” than in other states as well as reducing the value of its promotions to gamblers and eliminating “meaningful” partnerships with sports franchises and venues, according to NYSD.

Assemblyman J. Gary Pretlow reportedly pushed back on Robins’ statement about New York sportsbooks providing worse odds, calling it “collusion that would lead to a state investigation.”

One solution by state Sen. Joseph P. Addabbo Jr. seems to be getting some attention.

NY Sen. Addabbo Proposed Bill to Lower Rate to 25% Once NY Gets 15+ Sportsbooks

Currently, in New York, there are nine mobile sportsbooks operating and one solution to market shrinkage has been proposed by Sen. Addabbo in the form of a bill to lower the 51% tax rate to 25% once there are 15 or more New York sportsbooks.

That proposed legislation would reportedly nearly double the legal sports betting sites from the current nine to 16 by the 2025 Super Bowl, a potential solution that keeps tax revenue high presumably based on having more handle and sportsbook revenue to tax.

New York’s 2023 legislative session runs from January through the end of December, enough time for lawmakers to debate, compromise, and move forward with a plan that satisfies all parties involved, an ongoing story we will continue to update as more news emerges.

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Mike Lukas

Sports Betting & Gambling Industry Analyst

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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.
Nationality: American
Education: N/A
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