The greedy overlords of the sports betting industry have descended upon New York, and they’ve decided they want more.
In what was supposed to be a review Tuesday of how things went in the state’s first year of legal betting — and they went quite well — online sports betting behemoths FanDuel and DraftKings argued to the Committee on Racing, Gaming and Wagering that New York’s 51% tax rate on online betting was too high.
New York made more than $709 million in tax revenue on more than $16 billion in wagers through the year ending on Jan. 7, but FanDuel president Christian Genetski and DraftKings CEO Jason Robins argued the state has peaked. If New York doesn’t lower the rate, they said, customers would pay the penalty in the form of worse betting odds and fewer promotions.
“We do not believe that this level of economic success is sustainable with the current tax rate of 51%,” Genetski said, per SBCAmericas. “Although it’s only been one year since the market launched, there are clear signs that the New York market has already peaked, whereas other states remain on a solidly upward trajectory.”
This, of course, is no reason to shed a tear for sportsbook companies that negotiated the 51% tax rate in the first place. The first year was a success, so why would they want to come back to the table for any other reason than to get a larger piece of the pie?
FanDuel recommended a tax reduction to 35%, according to Legal Sports Report, saying a more competitive rate would lead to an estimated $350 million-plus in additional total gross revenue over a three-year period. But the sportsbook couldn’t provide concrete evidence to support the claim.
Thankfully, the NY state legislature doesn’t seem to be falling for the old bait and switch just yet. And without assurances that revenues will increase or stay the same, they shouldn’t.
“There was no sunset, so you knew it was 51% going forward. You negotiated it. You agreed to it,” state senator and committee chairman Joe Addabbo said. “And now we have these numbers, and there’s no real foundation to say these numbers are suffering at this point.”
Including the $200 million in licensing fees New York collected from sports betting, the state has generated a total of more than $909 million in revenue, with the majority supposedly going towards education. If DraftKings and FanDuel want to negotiate a smaller tax rate, they need to show that number won’t shrink. Or bring a better bargaining chip to the table than threats of robbing their own customers.
As New York assemblyman and co-committee chair Gary Pretlow said Tuesday, if they worsen odds, people can simply take their business to another sportsbook. And if they’re all juicing the books, that signals a level of collusion worth getting the attorney general involved.
Hard agree.
