Exclusive: AGA chief hits out at “especially challenging” New York tax rate

American Gaming Association (AGA) president and CEO Bill Miller has branded New York’s controversial 51% tax rate on sports betting GGR a “worrisome” tax which erodes the Empire State’s legal market.

Speaking exclusively to EGR, Miller highlighted the tax rate as seemingly making betting legally through licensed channels less attractive to the average New York bettor than making an illegal bet, due to implied better odds offered by street bookies or offshore operators.

“The simple fact is tax rate matters because you have to recognize that the illegal market exists, and the consumer today still has the option to use the illegal market,” Miller told EGR.

“If you make a tax rate that is difficult for legal operators to compete with the illegal market, there’s a reasonably good chance that the consumer is going to go to an operator where they’re going to get better odds because of the pricing issue.

“With a 51% tax rate that’s going to be especially challenging,” he added.

New York State went live with mobile betting on January 8, having gone through a fiercely competitive and intense scrutiny-led licensing process.

The state’s tax rate of 51% on GGR is the highest for an open market in the US, only equalled by Rhode Island and New Hampshire where a monopoly system also operates under an identical 51% rate.

By comparison, the tax rate on GGR is just 6.75% in Nevada and Iowa.

Despite the high tax rate, the Empire State has enjoyed a blockbuster debut, generating billions of dollars in betting handle.

An early promotional blitz by operators in the initial months following market launch, where free bets and money were all up for grabs, has since been replaced by a more tempered approach to marketing.

Operators including DraftKings, BetMGM, Wynn Interactive, and FanDuel have all publicly walked back from high promotional spend in New York, while Bally’s has chosen not to launch its Bally Bet sportsbook in the state while the promotional “bloodbath” continues.

Initiatives by New York State Senator Joseph P. Addabbo Jr and Assemblyman J. Gary Pretlow to reduce the tax to a more palatable 25% fell flat after failing to garner enough support from legislators on the house floor.

Expanding on the challenge facing New York and the role the AGA is playing in working on behalf of operators facing difficult market conditions through regulation, Miller called on legislators to reduce the rate payable.

“We talk all the time about the reality of the illegal market, and we’re working hard to try and get to be the focus and attention of the federal government and legislators alike,” he explained.

“We think that its worrisome in areas like encouraging responsible gambling because illegal operators have no obligation to be responsible with their players.

“If consumers who have now gotten the opportunity to bet legally go back to the illegal market are we better off or worse off? I don’t know but I think it’s worrisome,” he added.

Despite voicing his concerns, Miller praised the state for grasping an “important opportunity” by legalizing mobile sports betting as well as the positive impact on negating the illegal market, yet he warned the tax rate could undo all the hard work accomplished.

“Comparing those two choices, i.e., those where tax consequences affect the odds available versus those that have no tax consequences, there’s at least a very reasonable chance we’re going to lose the legal market to the illegal market because of the tax rate,” Miller said.

“It would be a great shame to see that happen, after working so hard to create legal, safe opportunities for consumers,” he added.