Proposal to Cut Sportsbook Tax Rates & Add Licenses on the Table in New York

A recent bill would allow up to 16 sports betting licenses in the Empire State and cut taxes on revenues to as low as 25% from the nation’s high of 51% currently in force.

Possible Tax Relief

It is no secret that sportsbooks operating in New York are not happy about the state’s onerous 51% tax on revenues. Boston-based DraftKings even floated the idea of taxing its customers’ winning bets to compensate for the exorbitant tax rate levied by the state. However, that idea was summarily squelched when rival FanDuel announced it would not follow suit.

Therefore, a proposal, A6013, sponsored by Assemblywoman Carrie Woerner, who chairs the Assembly Racing and Wagering Committee, to add up to 16 licenses and cut the tax rate to as low as 25%, will likely be welcomed by the nine licensees currently operating in New York.

New York currently has all of the major players operating in its market, including:

• Bally Bet
• BetMGM
• BetRivers
• Caesars
• DraftKings
• ESPN Bet
• Fanatics
• FanDuel
• Resorts World Bet

The bill is expected to garner support from Senator Joe Addabbo, who sponsored a starkly similar piece of legislation in 2023. If passed, the number of mobile sportsbooks in New York would rise to 14 by January 31, 2026, and then increase to 16 sportsbooks by January 31, 2027.

The tax rate would be lowered to 50% for 10-12 sportsbooks, dropping further to 35% once 13-14 sportsbooks entered the market and, finally, a 25% tax rate would be imposed when the maximum of 15-16 online sportsbooks joined the fray. Licensing fees of $25 million for platform providers and $50 million for sportsbook operators would be levied as well.

Not So Fast

However, reducing taxes on an industry that has handled more than $61 billion in wagers, generating north of $5.4 billion in revenue for the sportsbooks, and delivering $2.8 billion in taxes to the state since its launch in January 2022, will undoubtedly receive pushback.

During the National Council of Legislators from Gaming States’ summer meeting in July 2024, Troy Mackey, the coordinator of the New York Assembly’s Racing & Wagering Committee, commented on the possibility of another bill to lower taxes on sportsbooks that has now come to fruition.

“New York is doing extremely well, and it’s one of those things that you cannot go back now, unfortunately, to reduce the tax rate,” Mackey said at the conference held at Rivers Casino. “We tried to revisit that, and there was no justification. Well, you couldn’t justify taking away money from education and giving it to a corporation. That is the argument we’ve been up against.

“So, we tried to again put legislation out there to bring more entities into New York to reduce the tax rate, hoping that would balance it out, in reference to reducing the rate with more entities involved. Folks at a higher pay grade than myself were totally against that.”