New York State Lawmakers Weigh Sports Betting Tax And Much More

The headline story from New York State’s senate hearing on legal sports betting on Wednesday was NBA Executive Vice President Dan Spillane’s continued advocacy for a 1% tax on total betting handle for the NBA and other leagues. That fee and the NBA’s attempt to establish a justification for it will remain a contentious issue.

But the hearing gathered more than a dozen other speakers and touched on many other areas of the sports betting industry operations and legislation and beyond. Below is a concise (mostly) recap of the other testimonies from the hearing led by Senator John Bocanic, Chairman of the Senate Committee on Racing, Gaming and Wagering. The information below is organized by speaker and subjects discussed.

New York State Sports Betting Hearing: Integrity Monitoring, Legislation, Staying Competitive With the Illegal Market, Finding the Right Tax Rate, Horse Racing Operators Want In And More

Speakers: Andy Cunningham, Sportradar Director of Global Strategy Integrity Services and Tom Russell of Genius Sports, a global leader in sports technology and data services.

The purpose of Cunningham’s appearance is indicated by his position at Sportradar. Senator James Sanders of Queens asked forthrightly: “Would you have software to sell us?”

Paraphrasing Cunningham: Yes. Nevada bookmakers already uses such services (possibly through Sportradar, I’m not sure) and they’re crucial to preserving integrity for the leagues and bookmakers alike.

Russell discusses the value of an international or U.S. hub for sports betting. Basically, wider information sharing between states and leagues and sportsbooks. This would apply in a state-by-state model or federal framework.

Speaker: Joe Asher, CEO of William Hill US

After the NBA’s lobbying and the skinny on integrity monitoring, Asher provided some fresh air and delivered more broad-based remarks about the sports betting industry that New York may be entering. Asher delivered a pretty firm rebuke to Spillane’s position that the sports leagues deserve 1% for the integrity monitoring and alleged additional lifting they may need to do to keep monitor the games free of corruption.

Asher did not mince words, calling the NBA (and MLB’s ask at least in Nevada) for a 1% “integrity fee” a “euphemism for cut of the action.”

So you know where Nevada stands. Asher also addressed (a) the need for states to stay competitive with the illegal market, which have no regulatory expenses and thus can offer better lines and allow wagers on collegiate games (b) the benefits that already exist for sports leagues and additional opportunity, implying they shouldn’t be reaching for any direct cut; and (c) the growth and operation of mobile sports betting. Some real-time notes from the hearing:

"Illegal bookies pay no taxes and have no regulatory expenses." Joe Asher of @WilliamHillUS emphasizing how legal sports books have to stay competitive with illegal books.
— Sports Handle (@sports_handle) January 24, 2018

Asher: If legal bookmakers cannot offer betting on major
college sports, it will be very difficult to migrate customers from
the black market. You can’t expect customers to bet in the legal
market when their illegal bookie is the only one to offer betting
on Syracuse basketball.
— Sports Handle (@sports_handle) January 24, 2018

Asher of @WilliamHillUS says that there's huge ancillary benefits of sports betting for leagues– sponsors such as in the English Premier League. Also profit by sale of data to operators. Also increased fan engagement and value of the broadcast. #NYSsportsbetting
— Sports Handle (@sports_handle) January 24, 2018

Asher says Will Hill's 56% of wagering now occurs on mobile — although the in-person is much higher revenue (i.e. bigger wagers). #NYSsportsbetting
— Sports Handle (@sports_handle) January 24, 2018

Finally, Asher and senators discussed the importance of establishing a workable state tax rate on sportsbook revenue. Senator Joseph Aboddo Jr. in particular appeared receptive to this advice.

Boracic asks, what are industry best practices that New York should consider for regulatory framework, based on Nevada experience? Tax rate is huge – allowing sports books ability to compete. Sen Joseph Addabo Jr. emphasizes how that's crucial, too.
— Sports Handle (@sports_handle) January 24, 2018

We are witnessing a lot of pieces of proposed legislation that vary in tax rate on gross gaming revenue from about 7% (West Virginia) to 9.25% (Indiana) and 35% (!!) (Pennsylvania). To keep sportsbooks operational and competitive, they should look to Nevada which has tiers, but basically it’s 6.75%. Remember, that’s on revenue, not the total handle (as the NBA desires).

Some of the other speakers included Michael Kane of the New York Gaming Association, Christopher Kay of the New York Racing Association and James Maney from the New York Council on Problem Gambling.

Basically, the NYRA and racetracks want to make sure they’re included here and get licenses to operate sportsbooks at their facilities. State lawmakers probably will be receptive to this and help prop up a long-established but struggling industry with an aging core audience. A few notes:

According to Michael Kane, ED of New York Gaming Association, no constitutional amendment would be required for racetracks to offer sports betting. I'm not so sure that's true (based on the 2013 constitutional amendment). #NYSsportsbetting
— Sports Handle (@sports_handle) January 24, 2018

Next witness is Scott Freeman, President/GM of @tiogadowns (Tioga Down Casino Resort). They want sports betting, too (no surprise). He points to Pennsylvania's movement on this front. Tioga has close proximately, need to compete.
— Sports Handle (@sports_handle) January 24, 2018

James Maney, ED of New York Council on Problem Gaming (@NYProbGambling), now up. Focus is on preventing problem gambling.
If you think you have a gambling problem, read this article: https://t.co/PT3Q0PS42c
— Sports Handle (@sports_handle) January 24, 2018

Stay tuned — we expect more hearings of this kind in other gaming states looking to enter the market. Of course, this all hinges on the outcome of the Supreme Court Sports Betting Case, aka Christie v NCAA. For all our coverage on that, click here and/or here.