Follow the Money: Tax Dollars Well Spent

Follow the Money: Tax Dollars Well Spent

After the New York State Gambling Commission approved nine online sportsbooks in November of 2021, sports betting became legal in New York in January of 2022. Following decades of debate at the federal level over whether sports betting should be legalized, here’s a look at recent updates to the nuts and bolts of gambling legislation in the Empire State.

Off to the Races

New York’s first full year of online sports wagering saw $16 billion in bets placed, netting the state over 700 million dollars in tax revenue as nearly one in four New Yorkers cast at least one bet on a sporting event. Sportsbooks had to pay licensing fees as well, which brought an additional 200 million dollars to the state. Even though more than twenty states got a head start, legalizing online wagers before New York did, the state led the nation in both revenue brought in and was near the top in terms of the total dollar value of bets cast in 2022.

Part of the draw is that the state of New York has nine franchises among the Big Four sports leagues, making it a hotbed for prospective bettors following teams close to home. It’s been a good year for pro sports in New York: even after a nail-biting 34-31 win over the seventh-seeded Miami Dolphins during Wild Card Weekend, New York’s Caesars Sportsbook lists the Buffalo Bills as having some of the best odds to win the Super Bowl at +360.

Given that New York set one of the highest tax rates in the United States for gross gaming revenue (GGR) at 51 percent, it’s no surprise that the state profited more from sports gambling than any other state. The state legislature elected to pay those dues forward to those who need it most, perhaps the most positive impact of the online betting industry.

$5 million in tax revenue from sports betting has been earmarked for athletic programs for underprivileged youth, with another $6 million devoted to funding treatments for those with gambling addictions. The rest of the money, nearly $900 million, is set to go toward education.

The Year in Review

Lawmakers in New York have taken the opportunity to treat 2022 as a 52 week test run, looking at the data from last year so they can propose legislation to regulate the booming industry moving forward.

The Jamestown Post-Journal reported towards the end of December that a committee of state legislators was set to examine the revenue generated from sports betting in 2022 and see what to change, if anything, moving forward: the high tax rates have been a point of frustration for consumers. Nothing has been reported since, however.

Proposed Legislature

Guarding consumers from developing gambling addictions is of paramount concern for lawmakers. While almost all casinos and sportsbooks already contain disclaimers for help hotlines like 1-800-522-4700 and 1-800-GAMBLER (426-2537) on their platforms and in advertisements, state senators Leroy Comrie and Luis Sepúlveda proposed Senate Bill 1550, which would make it mandatory for sportsbooks to do so.

Another bill, this one sponsored by state senator Pete Harckham, would focus specifically on promotions like risk-free bets and deposit matches that sportsbooks use to attract new users, requiring the apps to contain further resources to prevent gambling addictions.

Prior to the advent of online gambling, prospective bettors had to physically enter casinos in order to place a wager. The bill states that because online platforms make it possible to attract new users from the comfort of their own homes, extra steps must be taken to protect consumers who wouldn’t usually be subjected to that kind of advertising.

It remains to be seen whether either of the bills will make it through the state legislature.