New York Sports Betting Bill Would Increase Operators, Cut Tax Rates

A bill that would bring a multitude of changes to the current sports betting landscape has been introduced to the New York Senate. 

Sen. Joe Addabbo proposed Senate Bill S1962 as the state continues to maximize its potential in the gambling market. Under the framework of his bill, New York would have at least 14 online operators up and running by the end of January 2024, and no less than 16 by the same time a year later. There would also be a tax cut for operators. 

A similar bill, introduced by Assemblyman Gary Pretlow last legislative session, failed to garner the necessary support. However, that has not deterred Addabbo from seeking change to the existing laws.

New York launched its online sports betting market just over a year ago. Despite being in its infancy, the market quickly became the largest and most powerful of all American states with legal sports betting.

New York made $909 million in revenue last year through its 51% tax rate on gaming revenues. Addabbo’s proposed tax reduction could prove to be a sticking point, given the massive amounts of money already at play.

That is why Addabbo is planning on being flexible. He believes that by introducing the bill, he is starting a conversation that needs to be had.

“It’s a starting point for negotiations in this brand new legislative session on the cusp of the state budget,” Addabbo said during a Tuesday interview.

All nine of New York’s online sports betting operators, including giants like FanDuel and DraftKings, are held to the 51% tax standard. Caesars CEO Tom Reeg said last November the rate was “ridiculous,” a sentiment other high-ranking officials at New York’s sportsbooks share. 

Pretlow attempted to address the tax rate with the bill he proposed last year but did not make any progress.

“I thought [the tax rate] was exorbitant,” Pretlow said in December. “But the operators are doing it, so I’m not going to take from education for them to make more money. So I’m pretty sure it will [stay].”

All online sportsbooks agreed to the tax rate when they submitted their license applications, which makes the retroactive negativity less impactful. Still, these operators could be saved by the new legislation if it passes.

Addabbo’s bill would not drastically change the tax rate in the short term. As long as the state has 10-12 operators (building upon the nine already in place), revenues would be taxed at a 50% rate—but after that, the number falls to 35% for 13-14 operators and 25% for 15+.

The theory is that the lower tax “steps” encourage more operators to join the New York market and also ensure the state government is still receiving the proper funding, just through volume rather than severity.

Other operators are already rearing to join New York’s market. Bet365 was denied an operator’s license during the initial application process, as were Fanatics and Barstool in their joint bid.

Fanatics already petitioned for a lower tax rate in New York, just like FanDuel and DraftKings, though it did not make any progress.

The implications of sportsbooks leaving the market are unknown. 

While legislators now have Addabbo’s bill to ponder and debate, Pretlow is also trying to convince them to expand New York’s list of betting markets. He wants operators to be able to offer odds on individual future awards, such as the NBA scoring leader, NFL MVP, and MLB All-Star Game MVP. 

Other issues to be discussed include adding betting kiosks to sports stadiums and bars and restaurants, and the legalization of online casino gaming. The latter is the subject of another incoming bill proposal by Addabbo.