New York Sen. Joe Addabbo has introduced a bill that would expand the number of mobile sportsbooks in the state and trigger lower tax rates for operators, two things he and Assemblyman J. Gary Pretlow have long desired.
Addabbo, the chairman of the Senate’s Racing, Gaming, and Wagering Committee, filed SB 1962 late Tuesday. It would expand the number of sports betting operators from nine to 14 by New Year’s Day of 2024 and to 16 by the following Jan. 1. Based on the bill’s sliding scale, the New York tax rate on gross gaming revenue (GGR) would drop from 51% to 35% with 14 operators and to 25% with 15 or more.
The bill also would allow sportsbooks to deduct promotional bets from the GGR they report to the state for tax purposes, though it doubles the license fee to $50 million from the amount paid by the original nine sportsbooks: FanDuel, DraftKings, Caesars Sportsbook, BetMGM, WynnBET, PointsBet, BetRivers, Resorts World, and Bally Bet.
“While there has been an exciting start to mobile sports wagering in New York, there is still room for improvement,” Addabbo stated in a bill summary. “This legislation would direct the gaming commission to issue additional [OSB] licenses so that we can continue to grow and improve the market.”
First attempt came up short
Last March, Pretlow filed a bill to increase the number of operators to 14 by Jan. 23 and at least 16 by January 2024. At the time, Addabbo signaled his desire to introduce companion legislation in the Senate, but the effort failed.
Under Pretlow’s plan, the tax rate would have become 50% with 10 to 12 operators and, with 13 or more, would have dropped to 35%. More than 15 operators would have triggered a 25% tax rate.
Among the objections Pretlow and Addabbo had to capping the number of operators at nine was the lack of ethnic diversity in the original group of licensees. Both Pretlow and Addabbo had pushed for more operators throughout the process, but then-Gov. Andrew Cuomo held a hard line. Among the groups shut out from acquiring licenses were the state’s Native American tribes, which operate casinos in parts of New York.
“The way that the rollout was defined by the governor kind of eliminated anyone except the biggest players,” Pretlow told Sports Handle last summer. “I was looking to have 20 or 25 different ‘skins’ at a much lower tax rate.”
Legislators seek more diversity
Addabbo told Sports Handle in July that he would like to see the tribes get a seat at the sports betting table in New York.
“Really, what they’re looking for is respect and to work with the administration,” Addabbo said. “I would have thought they would have had a better time and better possibility of obtaining that respect under the Hochul administration than under the prior administration. So, I can only hope that rational thought prevails and there’s some type of navigating a way toward resolving issues and to get a compact in the end. I’ll be watching it from a gaming perspective.”
In the original application process, bet365 was the first sportsbook operator left out, while a joint bid by Fanatics and Barstool Sportsbook also failed to gain licensure. Fanatics has joined FanDuel and DraftKings in recent months in an effort to lobby for lower tax rates on GGR.
Some operators have said they don’t see a path toward profitability in the state for at least several years, largely due to the high tax rate.
“I think it will increase the sustainability of the market, but the tradeoff is likely less tax revenue, at least in the short term,” said policy analyst Ulrik Boesen of the nonprofit Tax Foundation.
New York adopted the 51% tax rate also used in New Hampshire and has garnered more than $700 million in taxes on gross gaming revenue since it launched legal, regulated sports betting on Jan. 8, 2022.