BetMGM Scales Back New York Spending Amid Tax Troubles
Shannon Finney/Getty Images for MGM National Harbor.
BetMGM, a top-five online United States sports betting operator, is cutting investment in the largest US sports betting market after just five months.
“As rational allocators of capital with sophisticated investors in Entain and MGM, we simply can’t apply our capital against an irrational investment thesis,” Deutsch said. “Players would never continue to play if the house always won. The house cannot continue to play if it’s always going to lose.”
High Tax Paying Off for New York
A lasting effect of the Cuomo administration, much has been made over New York’s tax, which Deutsch added is more like 100% because it counts free bets and promotional boosts as revenue.
Earlier this year, the General Assembly proposed exempting free bets from taxation and lowering the rate to 25% by 2024. But they lost their appetite once they saw how much the current tax structure was making the state.
Since launching online sports betting in January, New York’s already jumped to third all-time in state tax revenue from betting, with over $216.3 million.
For all the complaining about New York sports betting taxes, in terms of what Cuomo set out to do (raise a lot of money), the state has succeeded. By the end of May, New York will have generated more tax revenue than any other state regardless of launch date.
— John Holden (@Johnsportslaw) May 17, 2022
“We have hoped that the New York tax environment will be updated, and we can then again more aggressively pursue New York players,” Deutsch said.
Holding Out Hope
Deutsch and the rest of online operators in New York may be waiting for a while.
BetMGM and its competitors have scaled back large promos since the January launch, though New York’s monthly revenue is still coming in significantly higher than anywhere else. In March, sports betting taxes yielded the Empire State $58 million — almost six times as much as Pennsylvania, the all-time leader in tax revenue.
State Sen. Joseph Addabbo Jr. has told Action Network he plans to revisit the tax cut again in the future, though until tax revenue begins to subside, finding support will be difficult.