NY’s Gary Pretlow presented an amendment that would cut the sports betting tax rate. It would also grow the number of skins and allow books to deduct promotional spending.

  • Assemblyman Gary Pretlow introduced an amendment that would cut sportsbooks’ effective tax rate from 51% to 25% by 2024; Sen. Joe Addabbo presented its sister amendment in the Senate.
  • The amendment would increase the number of online sportsbook skins to cut the tax rate, allow books to deduct promotional plays, and increase minority representation among operators.

ALBANY, N.Y. – New York’s national-high sports betting tax rate of 51% may be reduced significantly after Assemblyman Gary Pretlow introduced an amendment that would cut the tax rate incrementally.

Amendment Would Increase Number Of NY Sportsbook Skins

The amendment would lower New York’s effective sports betting tax rate by allowing the number of licensed mobile sportsbook skins to expand.

Currently, New York hosts nine operational online sportsbook skins; under the amendment, that number would expand to at least 14 by January 31, 2023, and at least 16 by January 31, 2024.

With 14 sportsbook skins, the effective tax rate would reduce to 35%. Once the number of sportsbook skins hits 16, the effective tax rate would fall to 25%, less than half of the current tax rate paid by New York’s sportsbooks.

Pretlow’s amendment in the New York State Assembly has a sister amendment in the New York Senate, introduced by Sen. Joe Addabbo.

The increase in the number of skins is viewed by some as a win-win situation for both the Empire State and New York’s sportsbooks.

New York has already claimed the throne as the most lucrative sports betting market in the United States. With nearly double that amount in place by February 2024, the market could stand to see some solid handle and revenue gains, besides the obvious tax benefits for sportsbooks.

New York should also be able to maintain the amount of tax revenue flowing into the coffer since the drop in tax rate coincides with the launch of new skins, which should keep tax revenues relatively steady.

Promotional Play, Minority Representation Clauses Also Included

Outside of the increase in sportsbook skins and decreased tax rate, the amendment would make another pair of relatively significant changes.

The first of these could have enormous implications for New York’s uber-competitive sports betting market: under the amendment, sportsbooks would be able to deduct promotional play spending.

Currently, this spending is taxed at the same rate as other sports betting receipts; however, in many other jurisdictions, promotional spending is not taxed. This allows sportsbooks to grow their consumer base without worrying about short-term financial ramifications.

Sportsbooks in New York spent an unprecedented amount on promotional plays during the initial period after launch. While that spending has since cooled somewhat, it is still a significant sum.

Industry experts have noted the correlation between early promotional spending and early market share; the promotional spending provision in the amendment may impact sportsbooks nearly as much as the reduced tax rate.

Alongside these measures, the amendment also includes language intended to push for greater minority representation among legal sports betting operators.

This may have been targeted at operator Fanatics, whose board of executives was to include billionaire rapper and New York native Jay-Z. Fanatics was left out of the first round of licenses.

If the number of sportsbook skins in New York were to expand, operators that were not granted a license in the previous round of applications would be eligible to reapply. This includes several notable operators – including the aforementioned Fanatics – as well as operators such as Bet365, Barstool Sportsbook, and FoxBet, among others.

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