New York online sports betting’s 51% tax rate is the highest of any state. It’s long been a point of contention between lawmakers and sports betting operators.
A recent change to Ohio’s tax rate has us wondering if or when changes could come for New York sports betting. Here are the details about Ohio’s change and what might be happening in New York’s legislature in the coming year.
Ohio sports betting tax rate set to double
In June, Ohio’s legislature doubled the state’s sports betting tax rate from 10% to 20%, just eight months into the launch of sports betting in the Buckeye State.
The changes came with Ohio’s new fiscal year 2024-2025 budget. The new tax rate went into effect on July 1 of this year.
Since launching sports betting in January 2023, Ohio has seen over $500 million in taxable revenue, meaning over $50 million has gone to the state. With the new tax rate of 20%, that number would have been over $101 million in taxes for Ohio.
What about the New York sports betting tax rate?
Ohio’s new tax rate is still much lower than New York’s, which – at 51% – is the highest of any state where sports betting is legal.
But New York is also the biggest market for online sports betting in the country. After launching mobile sports betting in January 2022, New York has set a record by being the fastest state to record $25 billion in handle.
In just the first four weeks of 2023, New Yorkers wagered over $400 million on New York’s sportsbooks.
All that with just eight online sports betting operators available in the state.
NY sports betting operators ask for lower tax rate
Those operators, though, have a bone to pick with New York. According to FanDuel and DraftKings leaders, NY sportsbooks are shrinking thanks to the 51% tax rate.
At a public hearing of the Assembly and Senate racing, gaming, and wagering committees in January, FanDuel NY President Christian Genetski said betting was down 20% since the first three months of 2022.
DraftKings NY CEO Jason Robins said that New Jersey is now growing faster than New York and that his company would have to take “draconian” measures to stay profitable here.
Those “draconian” measures could include “worse odds” than other states, lower betting bonuses and promotions, and cutting partnerships with sports franchises and venues.
Genetski said that FanDuel Sportsbook is now investing 50% less in New York.
What NY lawmakers are saying about the tax rate
State Senator Joseph Addabbo, Jr., proposed a bill this year to increase the number of sports betting operator licenses and to lower the tax rate to 25% once the number of operators hit 15 or more.
The legislation would have nearly doubled legal sports betting sites by the 2025 Super Bowl. The bill, however, did not pass this year.
Addabbo says that a tax decrease will not happen until someone can show that it would benefit the state and not just sports betting operators and sports bettors. Sports betting revenue in New York goes to education.
A significant drop in sports betting tax revenue might cause a significant enough shift for lawmakers.
That could occur if sports bettors in New York start placing more bets in nearby states with better odds. It could also occur if New Yorkers simply start losing interest in sports betting if the operators aren’t promoting partnerships and promotions.
We have not seen that drop as of yet.