As New York lawmakers mull the content of a proposed sports betting bill, they received advice from the non-profit, non-partisan Citizens Budget Commission. In a short paper entitled ‘Hold Your Bets’, the politicians were advised recently that it would not be wise to tax a fledgling sports betting industry too high. They were also told that revenue estimates from this industry should be conservative, and told that sports betting’s potential impact on other gambling revenues should also be considered.
The paper points out that lawmakers in New York should not place tax rates that make licensed sports betting and casino businesses noncompetitive. It has been shown in the United States and Europe, that high taxation rates are responsible for keeping players at offshore, unlicensed betting operators. Fewer casinos would be able to make a profit in the business if they are faced with tax rates that are too high.
According to ‘Hold Your Bets’: “Lower tax rates would arguably enable operators to spend more on marketing and customer service, invest more in technology, and potentially set odds that are more attractive to bettors. Conversely, setting higher GGR tax rates may result in fewer operators willing to enter the local marketplace, less investment in infrastructure and marketing, and less attractive odds. Ultimately this may result in fewer people transitioning from illegal to legal sports gambling.”
Lawmakers are advised that they should be conservative when considering the revenue that could be made from legal sports betting in New York. Experience in the state has shown that revenue projections always fall short, such as the estimates made for New York’s four new licensed casinos (Tiago Downs, Del Lago Resort and Casino, Rivers Casino and Resort and Resorts World Catskills).
CBC believes that sports betting may have an impact on revenue made from state run lotteries, which at present generate $3 billion in revenue for education aid in New York.
“The trend of newcomers taking share from incumbents is consistent with what has been occurring in other gaming markets, particularly in the northeastern portion of the United States,” writes the group.
