The next major step in New York sports betting should be coming this week. After months of uncertainty and deliberation, some sportsbooks are preparing for approval by the New York State Gaming Commission (NYSGC). The sportsbooks hoping to gain licensure in New York consist of three groups. These groups hope to launch before the Super Bowl this year.
The New York Post reported that the Betfair- and Kambi-led groups are expected to win bids. There were six groups that submitted applications to gain access into the mobile sports betting market in New York. In its report, the Post said a third winner could be picked, too.
Which NY Sportsbooks Could Get Licenses This Year?
|Group 2||Rush Street (BetRivers, SugarHouse),|
|Group 3 (on outside looking in for a license)||Fanatics Sportsbook|
Barstool Sportsbook (Penn National Gaming)
Also Read: New Yorkers frequenting Connecticut for sports betting purposes
How Tax Rates Affect Sports Bettors In New York
The Post also noted that several operators have agreed to an unheralded 51% profit-split tax rate in favor of the state.
Previously, the Buffalo News’ Tom Precious reported that these tax rates could be even higher. The 64% “final tax rate matrix” would be the highest of any sports betting tax in the United States. Currently, the 51% tax rate would be tied for the highest with New Hampshire.
I didn't want to share this earlier this AM because it hurt my eyes looking at it, but here is the "final tax rate matrix" that mobile sports betting bidders in NYS were told they had to meet. pic.twitter.com/P2LkZL4D0Z
— Tom Precious (@TomPreciousALB) October 19, 2021
Taking a large share of the tax revenue is great for the state but hard for the common bettor. Sportsbooks often use booster odds, free bets, and other promotional items to draw more customers. The state taking at least 51% of profits from the sportsbook will lead to worse in New York at a minimum. Moreover, the state will also require a massive $25 million licensing fee paid from each sportsbook.
The massive price to operate in the Empire State should not make sportsbooks balk much. It is expected that there will be $10 billion in sports betting next year. Of that projection, $1 billion of it would be profit that would be split with the state.
Unfortunately, the massive piece that New York state is taking from this market will likely result in higher vig and less promotional opportunities. Sportsbooks are unlikely to offer many free bet opportunities for casual bettors as the profit margins simply are not high enough at this tax rate.
Compare this to New Jersey across the Mario Cuomo Bridge. Sportsbooks in New Jersey split 13% of the tax revenue with the state, one of the lowest in the industry. The generous tax figures in New Jersey increase profitability for the sportsbook. Consequently, the sportsbooks will continue to make big money in New Jersey thanks to the tax rates. Furthermore, sportsbooks can offer more free bets and booster odds.
New York users are unlikely to get those same benefits that the New Jersey users enjoy so frequently.