The powers-that-be in the Empire State seem to have stepped in a big, steamy pile… and it’s their own fault. New York online gambling, and specifically mobile sports betting, may be set up for failure. And if it does fail, you can blame it on greed.
Betting online and mobile devices for sports wagers was just approved in April. But now the state putting exorbitant taxes and fees in place for operators. They are so high that many industry experts fear that they just won’t work.
This week’s big story is how New York online gambling may be dead on arrival. And if it is, you can lay the blame squarely on those setting up the fees and deciding the tax rate. New York online sports betting and mobile betting is set to launch before next year’s Super Bowl, but to do that they will have to charge operators so much in taxes and licensing fees that it may not be profitable.
Some in the industry are now calling New York’s plans “unworkable”. And for some perspective on how outrageous the fees are, let’s take a look at some of the yearly operational costs for online sports betting in three of the most popular states: Pennsylvania, Nevada, and New Jersey: The fees there range from a few hundred thousand dollars all the way up to $10 million! But that $10 million fee in Pennsylvania is a one-time charge… not annually!
But New York is asking for $25 million for a license right up front! Then tack on another $5 million for hosting the website in the state. That’s $30 million right off the top before any profits are realized. And even though the license is good for 10 years, that still works out to $3 million a year in fees!
Then, of course, operators must pay taxes on what they earn. And once again you can clearly see that Pennsylvania’s right out in front at 36%, which sounds awfully high until you hear that New York plans to charge operators in that state a minimum… a MINIMUM of 50% in taxes… maybe more! Some may call these charges exorbitant. New York state calls these charges a “competitive model”, which basically means they are hell-bent on squeezing every dollar out of every operator they possibly can.
Source: This Week in Gambling – New York Online Sports Betting
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