Lawmaker Wants To Explore Allowing Additional New York Sportsbook Operators

A New York lawmaker reintroduced a bill to continue the discussion on the possibility of expanding the number of sports betting operators in the state. Such an expansion would in turn lower the tax rate each operator must pay.

Sen. Joe Addabbo filed S 1962 to direct the New York State Gaming Commission to issue additional online sports betting licenses.

However, Addabbo tells Playin USA that it would take a lot of convincing for legislators to make a change given the success of the New York market.

After launching at the beginning of 2022, New York online sports betting broke records in its first year with a $16.2 billion handle, $1.36 billion in total revenue and $693 million in taxes.

“I merely reintroduced bills from last year, possibly starting a budget discussion on the topic,” Addabbo said. “I’m not pushing it but want people to be aware the issue is out there to be discussed.”

A representative of Assemblyman Gary
Pretlow told Playin USA that he would refile the bill in the Assembly as well. Pretlow and Addabbo chair the gaming committees in their respective chambers.

How bill would change the NY sports betting market

Currently, nine New York online sports betting operators pay the state a US-high 51% tax rate. In accepting a license, they agreed to pay that rate for 10 years. However, operators complain that such a rate is unsustainable.

S 1962 allows for a sliding tax rate based on the number of operators in the market:

• 4-5 operators = 64%
• 6 operators = 62%
• 7 operators = 60%
• 8 operators = 58%
• 9 operators = 51%
• 10-12 operators = 50%
• 13-14 operators = 35%
• 15 or more operators = 25%

Another key aspect of the bill is that it changes the definition of sports wagering gross revenue to exclude wagers placed with promotional wagering credits and write off the federal excise tax. That would be a huge difference for operators currently in the market while lowering taxes collected by the state.

New York online sports betting landscape

The New York State Gaming Commission chose three bids including nine online sports betting operators in November of 2021.

Four operators took 96% of the NY online sports betting revenue:

• FanDuel Sportsbook – $650.5 million (48%)
• DraftKings Sportsbook – $354.6 million (26%)
• Caesars Sportsbook – $214.6 million (16%)
• BetMGM Sportsbook – $81 million (6%)

PointsBet, BetRivers, WynnBet, Resorts WorldBet and Bally Bet combined for the remaining 4%.

For new licensees, Addabbo’s bill also would double the one-time initial licensing fee to $50 million.

But Addabbo and Pretlow say there are still companies interested in joining the New York online sports betting market. Barstool Sportsbook, Bet365 and Fanatics Sportsbook were among the applicants previously left out by the Gaming Commission.

NY unlikely to make sports betting changes in 2023

When a state becomes the market leader in activity as a result of current law, there isn’t a large appetite to mess with what’s working.

The state would exercise caution in making changes when 98% of sports betting revenue goes to education.

Addabbo said that could change if someone could convince lawmakers that the state would make more money by tweaking the system.

“Someone with appropriate financial background and skills, either on the industry side or legislative side, must make a credible argument that reducing the tax rate and increasing operators makes fiscal sense for the state, its people and our immensely successful mobile sports betting product.”

Other New York gambling legislation

The most-anticipated New York legislation on gambling is expected next week. Addabbo and Pretlow will refile their online casino bills with changes.

Pretlow did already refile an online poker-only bill that he has pushed since 2016. A 1380 would clarify that poker is a skill game. But poker also will be part of the online casino legislation to come.

Sens. Leroy Comrie and Luis Sepulveda filed S 1550 requiring all advertisements for gambling and sports betting to include warnings about potential harmful and addictive effects of gambling and a problem gambling hotline number.

Addabbo said he believes the Gaming Commission already has this covered but was open to the discussion.

“We have put the number on every slot machine and VLT, and every commercial has the disclaimer,” Addabbo said. “But if there is a way to promote it even more so, let’s do it. People only benefit from these programs if they know they exist, so any way we can promote programs we should consider.”