Friday, March 31 2023

New York legislators have heard from FanDuel president Christian Genetski and DraftKings CEO Jason Robins who both warned that New York’s staggering online sports betting tax rate will cause a shift in operational model should it not be lowered moving forward.

January 31st 2023 saw a joint hearing with the New York Senate and Assembly’s Racing, Gaming and Wagering committees who were looking back at a year of mobile sports betting operations which have seen astronomical tax receipts for the state.

How well did New York do in year one?

New York lived up to many analysts’ expectations, seeing over $1.3 billion in gross wagering revenue for the initial 12 months post-launch. The tax rate, sitting at 51% means the state has received a huge $709 million in taxes, and an additional $200 million in initial licensing fees.

Genetski and Robins both argue that the New York market has already peaked and is now on a downwards trajectory, compared to other states in which the trajectory remains largely positive. “There are clear signs that the New York market has already peaked, while other states remain on a solidly upward trajectory. Despite an inordinate level of investment in the first three months post launch, the New York market is not growing handle nor customer base like every other state” Genetski told the room.

Part of the reason above may be that due to New York’s proximity to New Jersey, the gambling culture was very much established and thus customer base was always likely to peak and stagnate early due to the maturity of the NYC market being far above that of other new launch states.

Why do operators want a tax deduction?

Robins has argued for a change in the tax rate, or ability to deduct promotional credits from taxable revenue would help assist growth. DraftKings in particular are well-known for aggressive marketing and high promotional spend, and Robins pointed out that with no promotional deductions the effective tax rate in the state nears 70%. Robins added that should concessions not be made, then promotional activity would have to be reduced leading to consumers taking the punishment, or odds being shortened, again pushing the idea that the state’s aggressive tax regime will ultimately see consumers punished.

While lawmakers say that the operators knew what they were signing up for, Genetski pointed out that the consortium of operators which comprises over 90% of the New York market by handle, suggested a 15% tax rate should nine operators be selected rather than the second consortium which includes the state’s smaller operators who agreed to 51%. After all, 51% of a small part of the pie is better than nothing.

Rep. Gary Pretlow argued: “You have to do this in concert with each other, and getting nine entities to collude to give worse odds in New York wouldn’t be really beneficial and that might get the attorney general involved in something like that.” Jason Robins defended his stance, saying that changes would be market driven rather than by collusion: “It wouldn’t be like day one, we just wipe out all the odds and make everything 20 percent more,” Robins said. “But we’re all looking at each other’s odds, we’re all making sure that we’re competitive.”

Online casino in New York is not legalized, and although pressure is mounting, it remains off the table at the moment. Casino gaming is available at casinos across the state, including tribal venues too.

Source: Basketball Insider


California resident scoops $4,000,000 but is CA sports betting on the horizon?


Chris Haynes: ‘Rob Pelinka still has a move or two left in him’

Check Also

Pro Sports Media

Trending Now

LSU Basketball Star Angel Reese Has Increased Her NIL Value by 243% To $392k Since Jan. 10

Angel Reese has taken full advantage of LSU’s run to the 2023 Women’s Final Four. The Bayou Barbie has increased her NIL value more than any player in college basketball this season and her star power has only increased during March Madness. Since Jan. 10, Reese’s NIL value has jumped 243%, more than any player […]

Read More

Panthers reportedly deciding between C.J. Stroud and Bryce Young | THE HERD

The Carolina Panthers have reportedly narrowed down their QB choices for the No. 1 pick: Bryce Young and C.J. Stroud. Colin compares the two QBs, then decides which one Carolina should select. AN HOUR AGO・The Herd with Colin Cowherd・4:16 Source: FOX Sports

Read More

Sam Darnold gets career reset, adds insurance for 49ers

Eric Williams NFC West Writer PHOENIX — Quarterback whisperer Kyle Shanahan secured another reclamation project this offseason when the San Francisco 49ers signed former first-round pick Sam Darnold to one-year, $4.5 million deal in mid-March.  Selected No. 3 overall in the 2018 draft by the Jets, Darnold failed to live up to lofty expectations in […]

Read More