Following the legalization of online sports betting in New York on January 8th, 2022, the online sports betting market has exploded in the Empire State.
Within the first nine days of legalization, the total number of online sports bets placed in New York eclipsed a grand total of $600 million and surpassed $1 billion within 16 days. This means that the years of lobbying to get bills approved quickly paid off, as New York established itself as the biggest legal betting market in the US.
Since then, there has been a growing number of sportsbooks in New York, all launching their own branded sites and mobile sports betting apps. There are now a total of eight operators, with a ninth on the way: Bally Bet Sportsbook is getting ready to launch their app in Q2, reaching the number of sportsbooks that were predicted to operate in the state. Undoubtedly, they will be incredibly eager to launch as quickly as they can.
Tax Revenues Soar
With all the success that has been seen with online sports betting in New York, state legislators will be kicking themselves that they didn’t legalize online sports betting sooner.
This is because, following the first six months of operation, the state has generated approximately $263 million in tax revenues. A record figure, according to Governor Kathy Hochul:
In less than half a year, New York has become a leader among states in implementing successful gaming policies, with hundreds of millions of dollars going to important programs that will improve the lives of all New Yorkers.
I am committed to upholding responsible and effective gaming policies that will move the industry forward and continue to drive our state’s economic growth.Kathy Hochul, New York Governor
The fact that New York has an industry-high tax rate of 51% is clearly a big reason for this: they’ve overtaken Pennsylvania ($256.4 million), which had the previous highest rate charging operators at 36%.
The Impact of Tax Revenues
The fact that Pennsylvania generated a similar tax revenue with a much lower tax rate could be a concern for state legislatures. This could lead to mobile sports betting operators in New York arguing for lower tax rates, appealing to the fact that tax revenue could potentially increase if they were lowered.
It is unlikely any move to do so will be imminent, with the state expecting figures to continue to increase, due to the number of sporting events that they have missed out on. Although online sports betting was legalized for the Super Bowl, which, as always, saw a lot of interest, 2022 will see the full NFL season be open for betting online for the first time.
There are also a number of international events that will draw major interest, too. The FIFA World Cup takes place later this year in Qatar starting in November, with the USMNT looking for their best performance yet in the biggest tournament in global sports.
Where is Tax Revenue Being Spent?
The new tax revenue will be split between a few areas in New York. The COVID-19 pandemic incurred huge costs, with stimulus checks handed out to assist businesses and citizens in financial distress. Some of this new revenue will go towards recovering those costs to prevent the state from having to raise taxes.
The other area where funds will be distributed is combatting problem gambling. The New York State Office of Addiction Services and Supports Commissioner Chinazo Cunningham stated:
The added revenue from mobile sports betting will allow OASAS to further enhance prevention, treatment, recovery, and harm reduction services for individuals or their family members who experience harm from gambling.Chinazo Cunningham, New York State Office of Addiction Services and Supports Commissioner