The New York sports betting market moved one step closer Monday to its online opening. The New York State Gaming Commission announced it has granted licenses to nine online sports betting operators, including some of the biggest names in the industry. Each will pay a steep 51 percent tax rate on revenue.
This is the highest tax rate of any multi-operator state market in the country and roughly five times the national average. Books will also be unable to deduct many of the promos, free bets, and other offers that help lessen their tax burden in other states.
New York’s massive population (19 million-plus people, fourth-highest of any state) still led more than a dozen companies to pursue licenses. DraftKings, FanDuel, BetMGM, Bally Bet, Caesars, Rush Street Interactive, WynnBet, PointsBet, and Resorts World all received a license.
“We’ve been looking forward to the opportunity to bring mobile sports betting to New York. With more than 19 million people, New York will be the biggest mobile sports betting market in the country, and we feel we are uniquely positioned to bring an incredible product to that market,” Caesars Entertainment CEO Tom Reeg said in a news release Monday.
Added PointsBet CEO Johnny Aitken in a company statement that echoed many of his peers: “Today’s news of being recommended by the New York State Gaming Commission marks an exciting moment for us at PointsBet. Having the potential to secure market access to New York state – expected to be one of the largest and most important markets in the United States – represents another major milestone for our company, our brand, and our technology.”
Penn National (Barstool), theScore Bet, Bet365, Fanatics, and FOX Bet did not earn licenses.
New York Sports Betting Tax Big Obstacle
Though no sportsbook will publicly tout worse-than-industry-standard offerings, the huge tax burden may force lines below market standards. It’s far too early to tell if, when or to what extent lines may be skewed against bettors, but with massive taxes squeezing profitability chances, it remains a distinct possibility for New York bettors.
Some operators have already said this will force them to cut down on marketing and promotions that are common in other states. Many U.S. sportsbooks have not shied away from spending hundreds of millions in new markets, but each big spender has argued these massive spends in the short term are key to securing long-term market share and success.
New York's massive 51% online sports betting tax rate (roughly 5x the national average) will create difficult revenue environment; $PENN CEO (didn't earn license) said sustained profit would be nearly impossible: $DKNG (earned license) says it will require promo, marketing cuts
— Ryan Butler (@ButlerBets) November 8, 2021
In New York, the tax might make profitability impossible. Penn National’s Jay Snowden basically said as much days before his company was not awarded a license. Officials from winning sportsbooks have, not surprisingly, been more positive about their futures in New York.
“This license advances our overall market footprint and marks the latest milestone on our journey towards becoming the leading omni-channel gaming provider in the U.S.,” Bally’s Board Chairman Soo Kim said in a statement.
“Above all, we look forward to providing New York’s devoted fan base with engaging, best-in-class sports betting experiences.”
But again, the tax rate clouds that future.
What This Means For New York Sports Bettors
For New York bettors, Monday’s license announcement is good news, even if the market won’t be as strong or customer-friendly as in some neighboring states. Nine leading and growing online betting brands are coming to the Empire State, likely before the upcoming Super Bowl.
Still, the corporate realities will pressure New York operators to limit or cut out opportunities common in New Jersey and other sports betting markets. That likely begins with curtailed promos and possibly leads to subpar lines and reduced market offerings.
