BetMGM Cuts Spending on Sports Betting in NY Over Tax Issues

SBNY » BetMGM Cuts Spending on Sports Betting in NY Over Tax Issues

Because of what it considers an “unsustainable” tax environment, BetMGM is stopping its NY sports betting investment. The company announced that it made a “concerted choice” to redirect gambling expenditure away from New York sports betting last week at its 2022 Investor Day.

BetMGM Investor Day - May 12, 2022
BetMGM Investor Day – Thu, May 12, 2022 11:03 AM EDT (6:03 PM IDT)

BetMGM fell to fourth in the New York market in April, according to NY Gaming Commission revenue figures.

Investing Wisely in New York Sports Betting

Gary Deutsch, CFO at BetMGM, said his firm may no longer back-marketing in a state with a 51 percent tax rate due to its “irrational investment thesis.”

“We can’t invest our money against an illogical investment thesis as rational allocators of capital with sophisticated investors in Entain and MGM,” commented Deutsch. “Players would never continue to play if the House always won. If the House is going to lose every single time, it can’t keep playing.”

Chief Financial Officer at BetMGM

Why has the House never won a bet on NY sports?

According to Deutsch, the overall effective tax rate is more than 100 percent. However, bonus write-offs bring the actual tax rate far above 100 percent.

“We’ve anticipated that the New York tax environment would be improved, and we may again more aggressively pursue New York companies,” according to the CFO.

Sports Betting In New York Is The Only Exception

However, given recent tax bills in Ohio and Kansas, New York tax contagion worries are declining.

“States need competitive tax rates to help them compete in an international market,” said Greenberg.

“Over time, it will become apparent that these more sustainable tax environments produce greater player engagement in the regulated market rather than the illegal one. Of course, this is in everyone’s interests.

Brawling on the black market

According to Greenblatt, the black market should be phased out over time due to increased product quality onshore and legal companies’ continued promotion.

He also requested assistance from regulators to combat offshore books.

“We have captured a good portion, but not all, of the U.S.-based sports bettors who were active before PASPA’s repeal,” Greenblatt added. “For sites still hosting content from within the United States from offshore, one only needs to look at search and traffic numbers to confirm this.

Softer data reveals that the black market is still thriving in American sports betting.

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