New York's 51% Sports Betting Tax Sparks National Trend
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00:00And, Matt, this was a very big deal at the time, several years ago.
00:06New York gets sports betting, all of a sudden they're charging 51 percent, the sports betting
00:10operators say, whoa, whoa, this is too much, we can't handle it, now every state is trying
00:15to follow suit.
00:16And what I would say is maybe other states don't get to that 51 percent, but we've definitely
00:21seen some hikes in tax rates across the country, I think as a direct result as to what New
00:27York State was able to accomplish.
00:30Well, Craig, I think there's no doubt that when New York set the bar so high, you had
00:35some other states go back and say, wait, we could do that.
00:38You know, some of these states went lower than it was expected to.
00:43Some of the states went higher.
00:44Right. Everybody thought Pennsylvania was egregious with its 36 percent tax and a
00:48$10 million license fee.
00:51And it turns out that that fit pretty well for that market, too.
00:54Everybody jumped into that market the same way that, you know, the operators were back
00:59and forth on this 51 percent.
01:01But at the end of the day, they still bid to get in the market because it's New York.
01:04Right. And that was kind of the message that we heard at the National Council of
01:09Legislators from gaming states last week.
01:12This is a meeting where lawmakers can get together and hear what other lawmakers and
01:21other states have done and get an idea of what they should be doing in their state.
01:25And it's clear that, you know, New York took this 51 percent tax rate, but it's New
01:32York. That's why it was able to do that.
01:34Everybody, you want to be in New York.
01:36You think about how many people, one, live in the state, but then to travel in and out
01:41of the state. And it's just a customer acquisition must to be in New York if you're
01:46going to be a national company.
01:49But this 51 percent, the operators want to see it come down.
01:52And that's crazy, right?
01:55When have you known government to give back money, Craig?
01:59And that is what as much as Troy Mackey, he's from the New York Assembly's Racing and
02:05Wagering Committee. He's the coordinator of that committee.
02:07And that's what he said.
02:08He said, quote, New York is doing extremely well.
02:11And it's one of those things that you cannot go back now, unfortunately, to reduce the
02:15tax rate. We tried to revisit that.
02:18And there was no justification.
02:20Well, you couldn't justify taking away money from education and giving it to a
02:24corporation. That is the argument we've been up against.
02:27And, Craig, I think that should be the argument.
02:30They are up against these companies that run sports betting.
02:34They are businesses. They are trying to make money.
02:37And that's great. But at the end of the day, when you say 51 percent of that money is
02:41going to the kids and education, going back on that is not what I would call politically
02:47a good idea. They've raised billions for education, Craig, and they can't stop now.
02:53They had tried to lower the tax rate by writing a bill to let more people come in.
03:00Mackey said that the original bill should have had more operators and it should have
03:04been taxed around 37 percent.
03:06That's where they thought the line should have been.
03:08And now we know that, of course, it's not.
03:11There's nine operators and 51 percent.
03:13And, Craig, they can complain about maybe offering worse odds, maybe doing this or that,
03:20not promoing as much, whatever.
03:22But they're going to be stuck with that 51 percent.
03:24So now, Craig, they're going to have to go when it comes time for iGaming.
03:29They're going to have to fight for the tax rate there and try to get a little bit back
03:33because sports betting just isn't going to change at this point.