The beginning of the week saw the state gambling regulatory bodies in the state of New York approve online sports betting licenses for nine companies to operate in the newly established market.
As revealed by the state gambling watchdog, the New York State Gaming Commission voted to grant two groups of sports betting companies 10-year operating licenses. The first group includes DraftKings, FanDuel, BetMGM (the joint venture of Entain and MGM Resorts International), as well as the online division of Bally’s Corp. The other group includes Caesars Entertainment, Rush Street Interactive Inc., Resorts World (acting as a joint venture of Empire Resorts and PointsBet), as well as the online division of Wynn Resorts Ltd. Kambi Group is also part of the second group, with the provision of some betting technology.
New York’s gambling regulator revealed that the sports betting revenue of the companies would be subject to a 51% tax. Currently, the local tax rate for online gambling is one of the highest ones in states where sports betting is already legal. Despite that, analysts believe that the mobile betting sector of the state would be a lucrative expansion target for gambling operators, especially considering the huge population of the state.
According to preliminary estimates, New York’s mobile gambling sector will eventually account for approximately annual tax revenue of $482 million from a sports betting market worth about $1 billion.
New York Has One of the Highest Online Gambling Tax Rates in the US
As mentioned above, the 51% tax rate that is to be imposed on the companies offering mobile sports betting services in New York is one of the highest tax rates in the legal sports betting sector of the country. Some gambling executives have noted that the prospects of mobile sports betting operators turning over more than half of their profits to the state after paying out the winnings to their customers may make operation in New York more challenging in terms of financial calculus in comparison to the one in other states.
For example, the current tax rate applicable to online sports betting services in New Jersey is 14.25%. For the time being, the state is one of the largest sports betting markets in the country. According to data provided by the state’s Division of Gaming Enforcement, approximately 90% of the wagers were placed over the Internet rather than from a brick-and-mortar casino in the year through September 2021.
As revealed by the American Gaming Association (AGA), sports betting tax rates in other US states vary, including as low as 6.75% in Iowa and 36% in the state of Pennsylvania. For the time being, sports betting has been legalized in a total of 32 states and the District of Columbia. Not all of them, however, have given the green light to online gambling services, with mobile sports betting being available in no less than 18 states and the District of Columbia.
Online Sports Betting in New York Could Be Available for the Super Bowl
Some lawmakers, who supported the sports betting legislation in New York, were upset that the nine companies that have been selected by the gambling regulatory body were not as many as they had hoped them to be. The operators also seemed not as diverse as the lawmakers had expected them to be.
At the beginning of the week, commissioners revealed they took into account whether the bidders would encourage ethnic, racial and gender diversity in their workforces, although factors like experience and expertise had more weight when making the decision.
The fact that the New York State Gaming Commission decided to grant the aforementioned licenses to some companies does not mean that local residents would be able to immediately start placing sports wagers from their mobile devices. First, the state would be required to approve some technical details regarding the implementation of the new form of gambling. Also, the gaming platform would have to be tested.
According to many industry observers, the systems will be in place by February 13th, when the biggest event of the year – the Super Bowl – is to take place.
