The State of New York collected more than $73 million in tax revenue from sports betting activity last month, smashing the previous monthly record by $10 million.
New York has now received $468.4 million in taxes since NY sports betting launched its online business in January. September’s $73 million in tax revenue broke the previous mark of $63 million from January 2022.
Sports betting operators pay 51% tax on gross gaming revenue in New York, one of the highest rates in the country, which now has more than 30 states with legal sports betting, plus the District of Columbia.
Fueled by the start of the National Football League season, New York reported a total handle of $1.26 billion in September, according to the New York State Gaming Commission. The total handle is the total amount of bets placed by bettors. September was the first month above $1 billion in handle in New York since June.
Since online sports betting launched in the first month of 2022, sportsbooks in New York have reported a total handle of $11.47 billion. Gross gaming revenue is nearing $950 million in less than a year.
New York Could Top $1 Billion in Tax Revenue in Year One
At the pace it’s on, and with three more full months of NFL action ahead, New York could exceed $1 billion in tax revenue from sports betting in 2022, which would obliterate all previous records in other states. In October, both the NBA and NHL will also start their regular seasons, and the MLB Playoffs are taking place. The New York Yankees are among the favorites to win the World Series, and interest in that iconic team should fuel baseball betting in the state.
According to the NYGC, DraftKings NY and FanDuel NY were the most popular sports betting operators in September. FanDuel ranked first in total handle, accepting $500 million in wagers, with DraftKings second with $422 million, followed by Caesars NY, which took in $163 million in sports bets last month.
All three of the top mobile sportsbooks are offering New York sports betting bonuses, from a $1,000 No-Sweat First Bet from FanDuel to $1,050 in various bonuses from DraftKings, and $1,250 in betting offers from Caesars. Sports betting operators cannot deduct promotional money from their taxable amount in New York, unlike in other states. As well, the 51% rate is locked in for 10 years in New York.
New York had limited retail sportsbooks since 2019, but in January, just prior to the Super Bowl, the state made its much-anticipated foray into legal sports gaming online. No fewer than a dozen mobile sportsbooks have been licensed in New York, with citizens now able to log on and place wagers from their mobile devices anywhere in the state.
Cost of Business is High for Sportsbooks in New York
A few sportsbooks have made indications that they will temper use of expensive new customer promo offers. Both BetMGM NY and Caesars have hinted that they would lower budgets for promo offers in an effort to stem the cost of doing business in New York. At least for now, as the state breaks records for sports bets and tax revenue, most sports betting operators seem content to fight over market share, with a feeling that only the strong will survive in a lucrative market.
In September, for the second straight month, operators posted a hold of more than 10%. In August it was a state record of 11.5%. Hold is the rate at which the “house” or sportsbook won the bets it accepted. Gross gaming revenue was just over $145 million for September, with a 10% hold rate that led to the record $73 million in tax revenue paid to the New York State Treasury in Albany.
In January, Ohio will enter the sports betting market when that state simultaneously launches retail and online sports betting. Later this year, Maryland is expected to go online with sports betting as well.
In California, the largest state and fifth-largest economy in the world, the debate over sports betting legalization is awaiting a verdict from the Nov. 8 elections. Two ballot proposals — one legalizing retail sportsbooks, the other making it legal for sportsbooks to operate online — are set to go in front of voters. But, polls indicate that both measures may fail. Some in that state pointed to New York’s 51% tax rate (compared to a modest 10% proposed in California under Prop 27), as a reason to oppose sports betting in California.
AP Photo/Ashley Landis
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