Sen. Joe Addabbo has presented iGaming Bill S4856 with a revised tax cut for the sports betting industry. It is expected to supplement efforts to introduce iGaming content to the New York region’s sports betting market. Albany sees a battle to integrate both spaces amid challenges, with relief only coming in the form of pushes from major operators like DraftKings and FanDuel.
The tax rate is currently set at 51%, but it hurts the sentiments of the operators. A push to get the rate reduced is stronger in hopes that the community gets better. Otherwise, the alternative of lowering the promotional offering would only begin to make sense. Meaning, the burden will not be passed on to customers, but benefits will cease.
According to Addabbo, the region lost approximately $4 billion in the years it chose not to legalize iGaming.
Assuming things go well and the bill is indeed supported, operators can expand their revenue sources at a lower tax rate. Therefore, operators, for one, are pushing hard for this bill.
One of the challenges is that passing the bill is no visible benefit. It has yet to make it to the final table of Gov. Kathy Hochul’s executive budget for FY2024. Howard Glaser believes otherwise, saying that NY’s revenue could go up to $800 million. The Global Head of Gaming Affairs at Light & Wonder has further added that the bill deserves recognition similar to corporate franchise tax and commuter tax.
In the first year of its legality, New York received more than $16 billion in tax revenue. After the bill is introduced, online sports betting sites intend to expand their operations and increase revenue; however, the tax rate of 51% must be negotiated and reconsidered.
Jason Robins from DraftKings is looking forward to having iGaming in the sports betting industry. Robins has shared an estimate saying that the region has the potential to generate yearly GGR in the range of $2.3 billion and $3.1 billion. This could even go up to $4.3 billion in the fifth year.
The iGaming bill by Addabbo shows a tax rate of 30.5% with an initial licensing fee of $2 million under the regulation of the NYS Gaming Commission. The license term will have a validity of 10 years, with operators allowed to host table games, slots, and live dealers. Approximately $11 million has been proposed to be allocated to the Responsible Gaming Fund.
Legalization of the iGaming sector is likely to come with the challenge of controlling the gambling habit. The same has already been addressed by allocating sufficient funds for it. In a much-needed move, illegal operators have been announced to be banned under the bill for the purpose of controlling unethical behavior.