House money grows in New York | News, Sports, Jobs
Online sports betting has been operational in New York for less than five months. Yet by this time, the state had already surpassed other states in one key category: tax revenue generated.
Democratic Governor Kathy Hochul announced Tuesday, citing data from the New York State Gaming Commission, that the state received $263 million from online operators. This is since the launch of the first operators on January 8.
“In less than six months, New York has become a leader among states in implementing successful gambling policies, with hundreds of millions of dollars going towards important programs that will improve the lives of all New- Yorkers”, the governor said in a statement.
The results are not necessarily surprising. New York is the most populous state in the United States to offer sports betting, and the state’s 51% rate of online operator revenue is significantly higher than most other states. Only New Hampshire and Rhode Island levy a similar rate, and these states have their lotteries that only handle sports betting.
In New York, a bidding process last year led to the Gaming Commission approving two bids representing eight platform providers and nine companies to operate sportsbooks in the state.
The high tax rate was the brainchild of former Governor Andrew Cuomo. He insisted on a minimum 50% tax for operators during negotiations with lawmakers over the budget for the 2021-22 financial year. During the bidding process, operators were required to offer their tax rate. In exchange for offering a rate of 50% or more, winning bidders were given 10-year license terms, which cost each platform provider $25 million.
Sports betting had been legal in New York City since 2019, but it was only permitted at Class III commercial and tribal casinos, all of which are located in upstate New York. Until earlier this year, most upstate New Yorkers who wanted to bet legally crossed the Hudson River to bet in New Jersey.
Cuomo had been cool to allow online gambling in the state, but his stance changed after the COVID-19 pandemic as the state faced a likely budget shortfall.
Including taxes generated by New York’s retail sportsbooks, which only pay a 10% tax, the state received over $267 million in revenue. Pennsylvania, where legal online and retail sports betting has been operating since 2018, generated $253 million. New Jersey, which saw its first legal sports betting open nearly four years ago, took in $229 million in taxes.
New York’s liberation does not include Nevada, where sports betting has been legal since 1949. Most other states only became eligible to legalize sports betting after the United States Supreme Court declared the law unconstitutional. of 1992 on the protection of professional and amateur sports in May 2018.
As the state celebrates its rapid rise to the top, carriers have pushed back the tax rate since the January launch. However, efforts to lower the rate so far have not been successful.
Earlier this month, BetMGM, one of the largest operators in the country and in New York, announced it was cutting marketing spending to acquire new bettors in the state, citing the high tax rate .
“We simply cannot apply our capital against an irrational investment thesis,” BetMGM CFO Gary Deutsch said during the bookmaker’s Investor Day presentation on May 12. “The players would never keep playing if the house always won, and the house can’t keep playing if it’s always going to lose.”