{"id":256960,"date":"2023-01-31T23:50:10","date_gmt":"2023-02-01T05:50:10","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=256960"},"modified":"2023-02-01T16:03:48","modified_gmt":"2023-02-01T22:03:48","slug":"fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/","title":{"rendered":"FanDuel, DraftKings May Cut New York Spending if 51 Percent Sports Betting Tax Stays"},"content":{"rendered":"

Top executives from FanDuel and DraftKings told New York lawmakers on Tuesday their companies will need to make drastic changes to operations in the largest US sports betting market. That’s if the state\u2019s 51% tax on revenues remains in place.<\/p>\n

\"Robins\"<\/a>
DraftKings Chairman and CEO Jason Robins tells New York state lawmakers during a hearing Tuesday in Albany that the 51% tax rate on sports betting revenue will lead to sportsbooks offering worse odds in the state than they do elsewhere. (Image: New York Senate)<\/figcaption><\/figure>\n

DraftKings Cofounder, CEO, and Chairman Jason Robins, and FanDuel President Christian Genetski testified during a hearing called by state Sen. Joseph Addabbo, D-Queens, and Assemblyman Gary Pretlow, D-Mount Vernon, on the impact online sports betting has had in New York during its first year. Addabbo and Pretlow chair the gaming committees in their respective legislative chambers.<\/p>\n

\n

New York state leaders have raved about the first year of online sports betting<\/a> being a booming success story for the state. More than $16 billion was wagered through the 3.8 million unique accounts registered to the nine licensed operators in the state, and those operators generated roughly $1.4 billion in revenue.<\/p>\n<\/div>\n

The state received more than $709 million of that, with almost all of that going to fund education. That amount easily eclipsed what state budget officials expected sports betting to generate. However, the two industry giants say that has come at a cost.<\/p>\n

While New York produces the highest handles and revenues of any sports betting state, the tax structure, which keeps operators from deducting bonuses as they can in other states, has already created a downward trending market, Genetski said.<\/strong><\/p>\n

\u201cIn New York, operators sprinted out of the gate with generous customer bonusing,\u201d he added. \u201cOnce operators understood how bonuses were being taxed, and it was evident no tax relief was forthcoming in 2022, their approaches immediately changed.\u201d<\/p>\n

Bettors May See Worse Odds Without Changes<\/h2>\n

Despite New York being FanDuel\u2019s top market, the company has decided to spend less per capita on advertising in the Empire State. In states like Maryland and New Jersey, Genetski said the per capita investment to attract new customers is three times the rate in New York.<\/p>\n

The decreases in marketing and promotional spending aren\u2019t the only potential changes operators may be forced to take if the tax rate doesn\u2019t change.<\/p>\n

\n

I think we’d be forced to take the actions, or some set of the actions, we described by making the odds worse for consumers, having the promotions be nonexistent or at least heavily dialed back, (and) cutting relationships with teams and local marketing partners,\u201d Robins said. \u201cWe would make nowhere near the total amount of revenue and profit that I think we could make in a more favorable setup, but at least we would be able to have a sustainable market.\u201d<\/p>\n<\/blockquote>\n

Addabbo and Pretlow have made proposals to reduce the tax rate<\/a> to 35% in exchange for additional licenses becoming available. Based on that rate, the sportsbooks would need to produce about $600 million more in revenue in order for the state to receive the same amount of tax dollars it’s currently receiving.<\/p>\n

That was met with some skepticism by at least one lawmaker.<\/p>\n

\u201cIf we lower the tax rate and you don’t do anything different than you’re doing now, that’s not going to … that’s not going to fix anything,\u201d Assemblywoman Carrie Woerner, D-Round Lake, said.<\/p>\n

‘Counterintuitive’ Proposal<\/h2>\n

Any proposal to cut the sports betting tax will likely meet some resistance in New York. Online sports betting was legalized in 2021 to help the state generate more revenue as it faced potential budget deficits in the billions of dollars. While the federal government provided short-term funding to shore up budgets during the COVID-19 pandemic, the state still forecasts multibillion-dollar budget deficits in the near future.<\/p>\n

\n

Genetski admitted that it seems \u201ccounterintuitive\u201d to call for a tax cut. Still, FanDuel believes if New York adopted the 35% rate, it would allow the company to invest up to $250 million in advertising and promotional spending in the state. That would help FanDuel land 300K new customers and generate $350 million in gross revenue over three years.<\/p>\n<\/div>\n

\u201cWe want the same outcome the state does,\u201d he added. \u201cWe want the state to make more tax revenue because that means that our business is growing, and we do believe that by lowering the rate to increase investment, we do get there.\u201d<\/p>\n

The 51% tax came about due to the negotiations between lawmakers and then-Gov. Andrew Cuomo in 2021. Cuomo had previously resisted calls to legalize online betting but changed his tune as the state needed new revenue sources. He insisted any plan would require sportsbooks to pay at least a 50% tax.<\/p>\n

Restaurants Want Kiosks in New York<\/h2>\n

Should an expansion of sports betting be on the table in Albany this year, the online operators aren\u2019t the only ones who want to have a say.<\/p>\n

The New York State Restaurant Association (NYSRA) wants to see any expanded gaming bill include an option for kiosks at restaurants and bars.<\/p>\n

\n

The restaurant industry is well positioned to take advantage of this burgeoning marketplace and grow New York\u2019s sports betting footprint,\u201d Melissa Fleischut, president and CEO of the industry trade group, said in a statement. \u201cWe understand sports betting terminals and kiosks might not have a place in every restaurant, and expanding available licenses may not be a silver bullet for the industry. However, for those where this is a fit, the additional revenue from on-premises sports betting could mean the difference between closing and survival.\u201d<\/p>\n<\/blockquote>\n

Kiosks have been implemented in places like Ohio and the District of Columbia. NYSRA noted a DC sports bar generated nearly $1.5 million in gross gaming revenue since the start of the current NFL season last September.<\/p>\n

Supporting the restaurants and bars in the quest to get in on the action is Elys Game Technology Corp., a gaming kiosk producer. Elys Executive Chairman Michele Ciavarella said New York is \u201can optimal landscape\u201d for additional retail sports betting outlets.<\/p>\n

\u201cExpanding sports betting to the neighborhood sector, as proven in Europe for over 30 years, could play a pivotal role in recovery in the hard-hit leisure and hospitality sector, a vital component of New York City\u2019s economy,\u201d Ciavarella said. \u201cWe believe that fostering a retail market is a question of convenience that would allow a sports bettor the option of patronizing a local restaurant or sports bar while enjoying a sports event, as adopted in DC, Maryland, and Ohio, as well as Canadian provinces while contributing tax revenue for community services and infrastructure.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Top executives from FanDuel and DraftKings told New York lawmakers on Tuesday their companies will need to make drastic changes to operations in the largest US sports betting market. That’s if the state\u2019s 51% tax on revenues remains in place. DraftKings Cofounder, CEO, and Chairman Jason Robins, and FanDuel President Christian Genetski testified during a […]<\/p>\n","protected":false},"author":45,"featured_media":256961,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[61,1074],"tags":[81842,81841,34,80968],"acf":[],"yoast_head":"\nFanDuel, DraftKings: Promos Slashed If 51% NY Sports Betting Tax Stays<\/title>\n<meta name=\"description\" content=\"New York made more than $700 million in sports betting taxes over the past year, but operators say the market is not sustainable.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FanDuel, DraftKings: Promos Slashed If 51% NY Sports Betting Tax Stays\" \/>\n<meta property=\"og:description\" content=\"New York made more than $700 million in sports betting taxes over the past year, but operators say the market is not sustainable.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-01T05:50:10+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-02-01T22:03:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/Robbins_NYS.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"680\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Steve Bittenbender\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Steve Bittenbender\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/\",\"url\":\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/\",\"name\":\"FanDuel, DraftKings: Promos Slashed If 51% NY Sports Betting Tax Stays\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/Robbins_NYS.png\",\"datePublished\":\"2023-02-01T05:50:10+00:00\",\"dateModified\":\"2023-02-01T22:03:48+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/eb30e765d812fc9b38b333f8d13068b2\"},\"description\":\"New York made more than $700 million in sports betting taxes over the past year, but operators say the market is not sustainable.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-draftkings-may-cut-new-york-spending-if-51-sports-betting-tax-stays\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/Robbins_NYS.png\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/01\/Robbins_NYS.png\",\"width\":1200,\"height\":680,\"caption\":\"DraftKings Chairman and CEO Jason Robins tells New York state lawmakers during a hearing Tuesday in Albany that the 51% tax rate on sports betting revenue will lead to sportsbooks offering worse odds in the state than they do elsewhere. 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