Lobbyists Optimistic That New York Sports-Betting Model Won't Become New Norm

December 16, 2021
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Gaming industry lobbyists have expressed optimism that New York’s unique high-tax model will not serve as a blueprint for other states to replicate as they enact their own sports-betting legislation.

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Gaming industry lobbyists have expressed optimism that New York’s unique high-tax model will not serve as a blueprint for other states to replicate as they enact their own sports-betting legislation.

On a webinar panel presented by Clarion Gaming on Wednesday, discussion quickly turned to the most anticipated sports-betting launch to date in the United States.

Ever since the state announced the award of sports-betting licenses to nine operators at a record-high 51 percent tax rate, some in the industry have expressed concern that other states would look to follow suit.

“This is certainly not a model we seek to replicate in the industry,” said Brandt Iden, head of government affairs for Sportradar. “It’s disappointing, because it’ll be very difficult to make any significant dollars there.”

“The good news is two-thirds of states have already passed sports betting, so it’s not going to be a model for many,” said John Pappas, CEO of Corridor Consulting.

“The problem in New York is people viewed this as a cash cow and how do we extract as much milk from that cow as quickly as possible,” Pappas said. “They chose to do it with the tax rate, that’s how they’re going to extract as much money out of the market as possible, and we’ll see if it succeeds.”

Stacie Stern, director of government affairs for FanDuel, said she believed other states would not follow suit.

“We talk about this all the time that each state has its own identity, legislators in different states think very differently about tax rates and fees, so an impact on North Carolina or Texas, not really,” Stern said.

“Maybe a little bit on a state like a Vermont or Maine, but I just think states really do cling to their own identities a lot of times, they want to do things their way,” she continued.

“They may look at it as a lesson of what not to do, that is pushing the tax rate too high, but we are happy to participate in New York and be part of it because it would surely be disappointing to be on the outside looking in.”

Pappas agreed with the sentiment that it is better to be operating in the state than be among the excluded, despite the high tax rate.

“I suspect they will find a way to make this a successful opportunity to expand their brand, expand their reach, it will have the ability to impact their products in other markets,” he said.

“We warned them that it was not the best way to create a thriving market, but New York is going to test this out, and I’m hopeful that all the operators there can find success.”

Iden also expressed concern that the goal of reclaiming revenue from New Jersey players would be impeded by a lack of VIP bettors in New York, who will choose to play in other markets.

“You likely will have your large whales, or big bettors, or sharp bettors who are always looking to get that half-point better probably shopping those lines and ending up right back in New Jersey,” Iden said.

“They’ll get some, they’ll pick up the average folks just wagering every once in a while on an NFL game, baseball game, but meaningful dollars, you may see those end up right back in New Jersey.”

The Empire State is still expected to launch mobile betting in time for the Super Bowl in February, but few new details have emerged since the New York State Gaming Commission announced licensees in November.

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