On Tuesday, June 2, Governor Kathy Hochul of New York announced that the state has collected just over $267 million in tax revenue from sports betting over the course of 2022. In just five months, the Empire State has collected more tax dollars from sports betting than most states have since their legalization of wagering.
Since January 8, mobile sports betting has produced $263 million in tax revenue, and taxes from commercial casinos make up another $4.3 million.
This revenue, compared to the total tax revenues of other states, is striking. Pennsylvania has accumulated $253 million in taxes since legalizing state-wide betting in late 2018. New Jersey, where betting was given the go-ahead in early 2018, has generated a total of $229 million.
Sky-High Tax Rates
This record tax haul can probably be attributed to the state’s 51% tax rate for operators. In 2019, during the license bidding process, the licensing guidelines included a requirement for each bidder to match the highest tax rate bid in order to qualify.
The first group of bidders, which included Kambi, Caesars, and Rush Street bid a 51% tax rate for a nine-operator market. The second consortium, led by BetMGM, FanDuel, and DraftKings agreed to this rate. New York has one of the largest active markets for sports betting in the United States, which is most likely the main reason these companies agreed to these terms.
All for a Good Cause
According to the New York Gaming Commission, the acquired funds will go towards education throughout the state. In its monthly mobile sports wagering report, the Commission states that $5 million towards education will be used for problem gambling education and treatment purposes. Another $6 million will be put towards youth sports activities and education program that provides grants for the state’s underserved youth.
Commissioner Chinazo Cunningham of the New York State Office of Addiction Services and Support stated:
“The added revenue from mobile sports betting will allow OASAS to further enhance prevention, treatment, recovery, and harm reduction services for individuals or their family members who experience harms from gambling”.
Too Much to Handle?
Within the state’s industry, big names are starting to lose hope. When asked about the company’s choice to remove itself from the New York betting scene, Gary Deutsch, CFO of BetMGM, stated that “the House cannot continue to play if it is always going to lose,”. According to him, the effective tax rate in the state totaled over 100%.
Another one of the nine license holders, Bally Bet, isn’t launching until April because of the insanity of the current market, which will cause them to miss out on both Super Bowl betting and March Madness betting.
Caesar’s Promo, another license holder, offered up over $3000 in promotions upon their entry to the market. This generosity scored them 47% of total bets throughout the first few days of betting.
Hope for the Future
Many executives are hopeful that New York will change the tax rate in 2023. Officials first considered a change within two months after the state’s initial launch, but nothing ever came of it. However, this demonstrates that the state is aware of the issues that come with such a high tax rate and may reconsider if given a longer period of time to do so.
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