Analysts believe New York cannot go any lower than their 51% sports betting tax rate

Last Thursday, the National Council of Legislators from Gaming States had its summer meeting in Pittsburgh. There was hope from some operators in the US that New York’s 51% sports betting tax rate would decrease. However, it was discussed at the meeting last week that New York cannot go any lower than the 51% tax rate they already have. Troy Mackey, the coordinator of the New York Assembly’s Racing & Wagering Committee, had this to say about there not being any room to change their tax rate.

“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,” said Mackey. “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.”

A smaller New York sports betting tax rate was discussed

Troy Mackey said the 51% tax rate was not the original number discussed for sports betting. It was former New York governor Andrew Cuomo who wanted to replicate New Hampshire’s 51% tax rate for DraftKings in their market. Mackey noted that the state originally wanted to have a 37% tax rate for sports betting. He felt that was a fair number for operators and the customers trying to use the product. In 2021, New York approved nine sports betting licenses. Not too far after in 2022, Senator Joseph Addabbo and Assemblyman Gary Pretlow wrote legislation that wanted to expand the market to 16 operators by 2024. Unfortunately for Addabbo and Pretlow, the legislation died without much support. If the New York sports betting market is surviving with the 51% tax rate, then there’s no need to make serious changes. Their 51% tax rate is what separates them from the rest of the market and it keeps the NY sports betting scene thriving.

Sportsbook operators have threatened to offer worse odds if NY can’t lower its tax rate

In the US sports betting scene, DraftKings and FanDuel are the two leading operators in the industry. Both companies have threatened to offer worse odds of their sportsbooks if New York cannot change their 51% tax rate. That could mean worse odds for NY bettors, fewer promotions, and fewer dollars spent on marketing deals with sports franchises in the state. This is according to DraftKings CEO Jason Robins. He had this to say in 2023 about New York’s incredibly high sports betting tax rate.

“It was a different time and a different market,” said Robins. “Operators, who were understandably excited about New York opening up, were focused far more on customer acquisition in the short term and far less on what would create sustainable market over time.”