New York Sports Betting Set for Expansion; Tax Cuts Move Forward in Budget Talks
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A recent proposal to cut New York’s online sports betting tax in half by adding more operators has been included in the legislature’s budget plan.
Borrowing language from a bill introduced earlier this month, the one-House budget proposal would expand New York from nine to 16 online sportsbooks by 2024, automatically lowering the tax rate from 51% to 25%, sources tell the Action Network.
Making its way onto the Assembly’s list of priorities gives any sports betting change a much stronger chance of passing than in just the form of a stand-alone bill.
It’s how New York legalized online sports betting in the first place.
Reshaping Sports Betting Under a New Governor
After years of bills that went nowhere in the assembly, lawmakers finally passed it as part of the budget last year. But that took a great deal of appeasing to former Gov. Andrew Cuomo, who insisted on a 51% tax–by far the largest of any state with more than one online operator.
Now that Cuomo’s out lawmakers are hoping to reshape New York’s sports betting market back to a structure they had pushed for in previous budget talks: a model some view as much more sustainable long term.
The changes are as follows:
- A drop from the current 51% tax rate on online sports betting to 35% by 2023, triggered by the addition of at least five more operators to the current nine-book market.
- An even lower 25% tax rate by 2024, triggered by adding at least two more operators (16 total).
- A tax exemption on all revenue attributed to free play or promotional wagers.
- First-dibs on additional licenses for two minority-owned sportsbooks.
The state generated a record $42 million in sports betting taxes in its first month alone. But already the handle (amount wagered) has dropped off in February, as many operators have pulled back hefty offers to match first deposits.
Unlike J. Assemblyman Gary Pretlow’s legislation the budget proposal does not specifically set tax rates, but rather gives the NYS Gaming Commission authority to adjust them in line with the statute, said Troy Mackey, coordinator of the Committee on Racing & Wagering.
That would result in the same de facto changes as the bill, Mackey said.
The Road Ahead
Gov. Kathy Hochul’s office declined to say whether or not she’s open to tweaking sports betting, though Pretlow previously told the Action Network he’s much more optimistic with her in charge.
It’s not crazy to bet on her support, either. In her own budget, Hochul’s proposing three new downstate casinos and she’s vowed more transparency than her predecessor.
She and the General Assembly have until April 1st to agree on a final budget for the 2022-2023 fiscal year.