NY Mobile Sportsbook Providers Face 64% Tax on Turnover

The 25th of October marked the deadline set by the New York State Gaming Commission for bidders to agree to their proposed tax matrix. Depending on how many licenses they approved, mobile sportsbook operators could be subject to a 64% tax rate on their gross gaming revenue. The State has projected a $500 million annual revenue boost, thanks to sports betting income.

As part of the application process, operators had to submit a tax rate they will comply with and 64% was the highest number offered. Applicants enjoy anonymity and operators who wish to receive their license may not take part in collusion.

 Betting on 50%

Following the former governor’s announcement that the state of New York would include online sports betting in this year’s budget, the NYSGC requested applicants to submit their bids by August. The State incentivised bidders who offered them a minimum tax rate of 50%. The proposed tax bands far exceed those of other states with legal sportsbooks in America.

The Commission could approve up to 25 operators and, according to the tax matrix, those operators would be subject to 35% tax penalties. However, if the number of approved operators falls within the minimum of 4 or 5 license holders, they would pay a hefty 64% tax on their annual gross revenues. Six platform providers submitted applications for 14 sport skins (operators).

Any provider that does not accept the set out tax rates will not receive a license to operate sports betting skins in the Empire State. Accepting or rejecting the tax matrix was the last step for bidders in their process of application. Former NY governor, Andrew Cuomo, said that the State will aim for a 50% tax rate for online sportsbook operators.

 Let Them Compete

Gary Pretlow, Assemblyman and New York lawmaker, believes it makes good sense to approve all the applicants. Pretlow is chair of the Assembly Committee on Racing and Wagering and encouraged the government to take an “all inclusive” stance when awarding licenses.

Pretlow tweeted:

“We have the opportunity to have the largest and most exciting sports betting industry in the country... We should license all applicants and allow them to compete for the business of New Yorkers.”

Apart from the tax income the State will gain, platform providers will also pay a $25 million application fee. Provided that all six bidders adjusted their offers, the State receives $150 million up front.

 Finalists in the Race

Gambling enthusiasts hope operators will receive their licenses before the 2022 Super Bowl kicks off. Their wish may just come true as the Commission will make their final selection of applicants by the 6th of December. There will be at least two platform providers with a minimum of four sports betting skins approved by January 2022.

It is unlikely that the NYSGC will approve all applicants, and it is unclear who adjusted their offers. We are more likely to see a final list that includes 12 operators from 4 platform providers. This would mean a 50% tax rate for providers, which is exactly what the commission’s goal was.

Big names are in the running to receive licenses from the New York State Gaming Commission and if they receive their licenses before the 2022 Super Bowl, the year will kick off with a sporting bang! Caesars, Bet365, Kambi, and FanDuel all wait in anticipation of the commission’s deadline on 6 December.