New York Gets $709M from Online Sports Betting Taxes in First Year; Why It May be Hard to Cut 51% Rate
Posted on: January 15, 2023, 01:58h.
Last updated on: January 15, 2023, 01:58h.
The results are in, and New York was definitely the big winner in the first year of online sports betting in the state.
A release from Gov. Kathy Hochul’s office Friday reported that the state collected more than $709 million in tax revenue from online sports betting, which launched on Jan. 8, 2022. The figure jumps by another $200 million after you factor in the licensing fees, which were $25 million for a 10-year permit.
Those revenue figures are the most of any state for a year of operations. With nearly 20 million residents, New York is the largest US state to offer online sports betting.
In just one year, New York has become a national leader in providing responsible entertainment for millions while bringing in record-shattering revenue for education, youth sports, and problem gambling prevention,” Hochul said in a statement.
Through Jan. 7, the state’s licensed operators have accepted nearly $16.6 billion in wagers. The sportsbooks claimed revenues of almost $1.4 billion, and the state taxes those revenues at 51%.
The overwhelming majority of the tax revenue will benefit the state’s education system. The state also allocates $5 million each fiscal year to cover athletics programs for underserved youth. It also earmarks $6 million each fiscal year for problem gambling services.
“The additional revenue generated will help to ensure that we have a robust system of programs and services to address the needs of individuals, families, and communities across the state,” said Chinazo Cunningham, the commissioner for the New York State Office of Addiction Services and Supports.
NY Sports Betting by the Numbers
According to data from GeoComply, nearly 3.8 million unique accounts were created in the state over the past year. More than half were created during the first two months of last year. There were nearly 1.7 million accounts established last January and more than 550,000 in February.
While some New Yorkers opened accounts through multiple operators, the 3.8 million accounts represent more than 28% of the state’s betting-age (21 and older) population. There are 13.5 million adults 21-and- older across the state.
By far, the most popular event was the Super Bowl. GeoComply found nearly 700,000 accounts were active before and during the NFL’s big game. The next most popular championship event was last month’s FIFA World Cup Final, with 262,000 accounts active. The NCAA Men’s Basketball Championship game attracted nearly 200,000 accounts in the state.
The $709 million in tax revenue from online sports betting far exceeds what state budget forecasters projected from the gaming market after lawmakers included online sports betting in the budget bill nearly two years ago.
New York’s fiscal years run from April to March, and for the 22-23 fiscal year, which ends on March 31, the state initially projected $357 million in tax revenue. The tax revenue for the fiscal year already exceeds $546 million. And there are still two and a half months left in the fiscal year.
Cutting 51% Tax May Prove Difficult
Sports betting operators have long complained about New York’s tax rate, a product of the deal then-Gov. Andrew Cuomo insisted that when state lawmakers proposed legalizing online wagering. Cuomo resigned from office just weeks after the state released the license solicitation.
While the revenue has far surpassed initial expectations, don’t expect the state to be willing to cut the rate. New York officials still expect budget deficits in the years ahead. For the 24-25 fiscal year, budget forecasters expect it to approach $3.5 billion. It’s nearly $6 billion in 26-27.
With sports betting taxes funding education, some lawmakers will be hard-pressed to accept any reduction in the rate. That’s especially true if the state fails to find other new sources of revenue to offset the expected gaps.
What may need to happen is a discussion about legalizing iGaming, or mobile casinos, in the state. Mobile casinos will very likely generate more revenue than sports betting. That means operators and state officials may be able to find a solution that would allow New York to generate essential education funding while improving the profitability of gaming operators.
The New York State Legislature just began its 2023 session. We should see soon if there’s any appetite to include more gaming options after lawmakers approved online sports betting and downstate casinos in the last two years.
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Source: casino.org
