BetMGM to Adopt Conservative Approach to New York Operation Until Tax Rates Change
The success of the New York sports betting market was one that was predictable, but the amount being wagered in the state has overtaken any projections. Within two months, an incredible $2 billion had been wagered, and though the level of interest and revenue isn’t continuing at that level, it’s, without doubt, the most successful sports betting launch in the country thus far.
The brands who were offered a license to operate in the state are doing very well, but the sums they have had to invest in advertising and promotions to help secure the lucrative value of each player have been high, and that, coupled with a very large tax burden has led to some to reduce their push when it comes to promoting their services.
BetMGM is among the most popular brands in the US, and that’s evident from any BetMGM casino review as well as their sports operation; it is looking to change its approach to the New York market.
BetMGM is now fourth in terms of the revenue made by sports betting, which is a drop for the household name, and CFO Gary Deutsch has railed at the very high tax rate, which many had hoped would reduce due to the incredible level of money that has gone into the state coffers;
“As rational allocators of capital with sophisticated investors in Entain and MGM, we simply can’t apply our capital against an irrational investment thesis. Players would never continue to play if the house always won. The house cannot continue to play if it’s always going to lose.”
“We have hoped that the New York tax environment will be updated, and we can then again more aggressively pursue New York players,” Deutsch added.
The current tax rate is a massive 51%, the highest in the country, and there had been talk of a wider field of operators being offered licenses, resulting in a reduction down to as little as 24%, but this hasn’t transpired.
Understandably the licensed operators are looking for some leeway, not least as the presence of regulated options will help to defeat the offshore market, which is at best murky and at worst downright fraudulent.
This has been echoed by BetMGM’s CEO Adam Greenblatt;
“It will become clear over time that these more sustainable tax environments result in greater player participation in the regulated as opposed to the illegal market,”
“This is in all of our interests,” Greenblatt added.
BetMGM is looking at other markets to help diversify their portfolio, and a move into Latin America has been mooted, where no doubt the amount they’ll have to pay in tax will be far lower.
As far as the New York market, BetMGM has slipped behind the likes of DraftKings and FanDuel, and even Caesars has overtaken them in terms of their share of the sports betting pie, and arguments about the high tax rate clearly affect all the brands operating in the territory, and as such, they must look at ways of pushing their brand in the state.
