PlayNY has predicted that New York will “find it difficult” to reach its originally projected $500m in annual tax revenue by 2024 due to its 51 per cent tax rate.
To reach this target, PlayNY states that New York’s nine online operators will need to combine for $1bn in gross gaming revenue, a threshold that has never been reached by a US market over the course of a single year.
Former Governor Andrew Cuomo‘s administration budgeted for proceeds from online gambling to reach $99m in FY 2022, $357m in FY 2023, and $500m by FY 2024.
Despite the predicted shortcomings, Eric Ramsey, data analyst for the PlayUSA, stated the New York market will be “highly lucrative for the state” but will fall short by the market’s third year.
He stated: “For New York to reach $500m in annual tax revenue, it will take a groundswell of demand that would be unprecedented in US sports betting history.
“New York will be unique in its size and structure among US sports betting markets, so it would be unwise to say it’s impossible. But hitting that goal by year three is probably overly optimistic.”
Presuming those aforementioned nine operators will “hold” an average of about 7.5 per cent of all wagers, reaching the official projections would require operators to handle more than $13bn in bets over the course of a year.
Pennsylvania, a populous state that PlayUSA says currently has the highest commercial tax rate in the US at 36 per cent, is the closest comparison among US markets. Pennsylvania’s 14 sports betting operators are on pace to generate more than $6bn in wagers this year. That will yield about $115m in state taxes.
But even if New York falls short of its $500m goal, PlayNY claims sports betting will “almost certainly generate significantly more” in tax revenue than any other state.
“New York’s model might end up being the right choice for the state, even if it can’t be successfully replicated in most other places,” Ramsey added.
“Bettors will have a variety of sportsbooks to choose from, fostering a healthy market and competitive pricing. And given the allure of the New York landscape, operators proved themselves willing to pay taxes at a rate typically reserved for much smaller monopoly markets.
“There are tens of billions of wagering dollars waiting to be captured in New York, but the question remains whether operators can capture enough to reach the budget projections.
“To reach those lofty goals, New York’s nine operators will have to offer a competitive enough experience to compete with neighboring states, offshore sites, and neighbourhood bookies despite the high tax rate. Will it be enough? We shall see.”