Current regulations have governed the market since it went live on 8 January 2022, but a new amendment to bill 8471 – sponsored by New York State Assemblyman J. Gary Pretlow – could lead to an influx of new entrants and a more attractive tax rate for participants.
The amended bill permits for no fewer than 14 mobile sports betting operators to be licensed and operational in the state by 31 January 2023, rising to 16 by 31 January 2024.
“In the event that the commission fails to approve the required number of operators by these deadlines, it shall not interfere with the ability of previously licensed platforms or operators from continuing to operate in the state,” the amendment states.
Importantly, the tax rate on GGR will reduce depending on the number of operators licensed to provide services in New York, according to the edited legislation.
The tax rate, which currently stands at 51% for nine licensees, would reduce to 50% for 10-12 operators, 35% for 13-14 operators and 25% for more than 15 operators.
It further states that companies that failed to receive a licence in the initial round, including bet365, Fanatics and Fox Bet among others, would be allowed to reapply for a licence.
JUST IN: Assemblyman @JGPretlow has filed a bill that would amend New York’s online sports betting law by increasing the # of operators to at least 14 by 1/1/23, and to at least 16 by 1/1/24, and reducing the tax rate on a sliding scale based on the # of operators (15+ = 25%) pic.twitter.com/aYVBg1EOqO
— Daniel Wallach (@WALLACHLEGAL) March 4, 2022
The bill allows new applications for mobile sports betting licences to be submitted from 1 September 2022, should the amendment pass senate approval by that date.
The New York State Gaming Commission would further require each platform provider for mobile sports betting to pay a one-time fee of $25m, while each operator authorised for mobile sports betting must pay a fee of $50m within 30 days of commission approval.
The regulator produces weekly data reports on handle and GGR broken down by operator. The amended legislation also permits operators to exclude sports wagers placed using promotions and bonus offers from their overall sports betting gross revenue.
DraftKings CEO Jason Robins was the first to reveal that new legislation was being discussed in New York to lower the current GGR tax rate.
His company is one of several spending millions of dollars on marketing to acquire customers in what has quickly become the biggest regulated betting market in North America.
High marketing spend, combined with the cost of continuing operations and the added 51% tax rate, have led to concerns that New York may never be profitable for betting operators. A reduced tax rate would help to alleviate those concerns in the eyes of investors.
Finally, the amended bill now includes ‘casino’ in its definition of sports wagering gross revenue. In February, a separate bill was filed in New York with the purpose to legalise and regulate online casino and iGaming in the US state for the very first time.
The amended bill, which has now been submitted to the New York Senate Racing, Gaming and Wagering Committee, can be accessed here.