Concerns Rise Over Gambling Tax Levels in New York

As the US gambling industry continues its expansion, tax continues to play an important role. US states are enjoying all the tax revenue they are receiving but there may be problems ahead in New York.

The legalisation of mobile sports betting in the state has been a massive success. However, the tax rate of 51 per cent is not proving popular with the companies operating in the state. Several believe that the tax rate is simply too high and are calling for a review.

It’s not just those in New York that are concerned at the 51 per cent rate. A recent survey showed that other operators are fearful that further US states may decide to increase their tax rates leading to reduced profits.

It was in January that New York finally legalised mobile sports betting. There had been a long delay in doing so but the pandemic hit finances hard. That led to a change of opinion and the legalisation.

However, that was the good news and the operators who have opened were shocked at the 51 per cent tax rate on gross sports betting revenue. That’s not surprising as it is the highest level in the US.

That figure is way higher than the average US sports betting tax of 19 per cent. In New Jersey, the tax level is only 14.25 per cent. Pennsylvania has a rate of 36 per cent but that’s still well below the level set in New York.

Another concern for New York state operators is how the tax due is calculated. New York includes in their calculations promotional credits that are given by the sportsbooks to their customers. Bloomberg are reporting that operators are now cutting back on their promotional and marketing offers.

The problem is that while companies such as DraftKings and FanDuel are critics of the tax rate, they did agree to them when applying for their New York licenses. That’s pointed out by Senator Joe Addabo. He’s the chair of the Senate’s Racing, Gaming and Wagering Committee.

The senator is likely to be delighted with how the mobile sportsbooks have fared since January. Over $250 million has been received in taxes with the sportsbooks taking in over $7.5 billion.

The monthly figures have dipped a little in recent months. However, The month of May still saw a sports betting handle of $1.26 billion. When the new NFL and college football seasons begin, figures are expected to rise again.