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If you thought the 36% tax on sports betting in Pennsylvania was high, move over and make way for New York with its sick 51% tax.
New York in January became the largest US state to embrace online sports betting but the high tax rate makes it close to impossible to compete.
The betting companies operating in the Empire State include DraftKings, FanDuel, Caesars Sportsbook, and Rush Street Interactive.
That'll make it harder for operators to profit off their customer bases in the state, Jason Ader, CEO of SpringOwl Asset Management and 26 Capital Acquisition Corp, tells MSN News.
"Everybody wants to be in New York because it's a trophy market in terms of the size of the state and its importance, but the tax rate is really prohibitive," Ader said. "It's very hard to make money in sports betting. Put 51% tax rate on it and it's maybe a bit more like a fool's gold rush than a gold rush."
As far as players go, these taxes will likely be passed down in the form of less attractive lines, bonuses and cashout fees. In the early months, companies may seek to reduce the affect on customers. These companies will also report all winnings to the IRS, something offshore sportsbooks and local bookies do not do.
Some websites licensed outside the state in offshore jurisdictions continue to do business in New York. Many, like Bovada, BetOnline and BetAdrian, have pulled out of that market.
- Gilbert Horowitz, Gambling911.com
