New York State has only just started its mobile sports betting market, and there are already some concerns about its viability. Some experts such as Jason Ader, CEO of SpringOwl Asset Management and 26 Capital Acquisition Corp. shared that the 51% tax rate could turn out to be problematic for operators such FanDuel, DraftKings, Caesars Sportsbook, and the rest.
On January 8, 2022, the Empire State officially launched online sports betting for the first time in its history, thus becoming the largest state in the U.S. to offer such service. It debuted with four licensed gaming operators, with the five expected to launch their platforms before the Super Bowl in February, which is the largest sporting event on the continent.
Tax Rate Might be Too High
The New York State Gaming Commission determined that operators must pay a 51% tax rate in order for them to operate in the state a licensed gaming operative. Currently, the Empire State’s tax rate is one of the highest in the country, and it is tied with New Hampshire. This will make it much more difficult for gaming operators who want to succeed in the region.
Jason Ader, CEO of SpringOwl Asset Management and 26 Capital Acquisition Corp. is also not quite fond of the 51% tax rate. He commented that the amount will make it significantly more difficult for gaming companies to profit. According to him, every gaming company wants to be involved, as NYS is a trophy market in terms of size and importance.
Sports betting in the U.S. is far from a fully developed and explore product as it is not that profitable as a business. This is due to companies spending too many funds on marketing and promotion campaigns to attract new crowds. NY mobile sports betting operators such as DraftKings and FanDuel will almost certainly find more success in New Jersey.
In contrast to NYS, Garden State’s tax rate stands at 14.25% for both mobile and online sports betting. Also, New Jersey launched its mobile sports wagering market back in 2018. This has led to many New Yorkers traveling to the state, in order to place their wagers on one of many online platforms. Thus, costing the Empire State plenty of revenue.
Five More to Launch
New York officially started its mobile sports betting regime on January 8, 2022, with four gaming operators launching their own platforms and accepting bets. The four companies are Caesars Sportsbook, DraftKings, FanDuel, and Rush Street Interactive. The five others which are yet to receive regulatory approvals to begin are Bally Bet, Bet MGM, PointsBet, Resorts World, and Wynn Interactive.
Addiction Experts Prepare
However, with the digital expansion of the state’s gambling sector, some addiction counseling organizations are worried about the increasing accessibility to betting. One of the programs is the Northeast Problem Gambling Resource Center, which is alarmed that with the increasing variety and access, local bettors will be much more susceptible to gambling addictions. Council on Problem Gambling is also hopeful to receive more funding to tackle the problem.
Source: Rodriguez, Ashley “New York’s sky-high sports betting tax rate could make it hard for companies like DraftKings and FanDuel to profit in the state”, Insider, January 12, 2022