RACING, GAMING AND WAGERING

NEW YORK'S MOBILE SPORTS BETTING GENERATES RECORD REVENUE IN FIRST YEAR, REGULATORS HIGHLIGHT PROBLEM GAMBLING CONCERNS New York's mobile sports betting market generated unprecedented revenue in its first year of operation, with $416.5 billion wagered—the highest in the nation—and $700 million directed to education, according to testimony before a joint Senate-Assembly committee hearing on Tuesday. Robert Williams, executive director of the New York State Gaming Commission, told lawmakers that the state approved 1,001 wagering variations across 106 sports leagues and managed 806 patron complaints in 2022, with 97.3 percent involving customer service issues rather than regulatory violations. Only 58 alleged instances of underage participation were reported through lawfully created accounts, Williams said. The hearing, held at the Legislative Office Building in Albany, examined the regulatory framework governing nine licensed operators and addressed concerns about problem gambling, advertising practices, and event integrity. Williams noted that the commission has implemented strict identity verification requirements, including Know Your Customer software, to prevent underage access. Sen. Nathalia Fernandez, chair of the Alcoholism and Substance Abuse Committee, pressed Williams on how individuals suffering from gambling addiction are identified and connected to treatment services, signaling legislative concern about problem gambling oversight. Sen. Leroy Comrie asked how the commission tracks and prevents underage gambling on mobile platforms. Williams acknowledged that while the commission cannot police parents or relatives who allow underage persons to use lawfully established accounts, research suggests problem gambling rates have remained relatively stable over 40 years despite increased gambling access. He recommended the commission consider adopting the American Gaming Association's responsible marketing code and proposed rules prohibiting sports wagering advertising on college and university campuses. Chair Sen. Joseph Addabbo emphasized that the legislature must remain vigilant about problem gambling and "pre-addiction" issues, stating that New York must maintain the best mobile sports betting product in the nation while protecting consumers. The hearing reflected broad bipartisan support for the program's revenue generation while highlighting emerging regulatory challenges around advertising and problem gambling prevention. NEW YORK'S MOBILE SPORTS BETTING MARKET FACES SUSTAINABILITY CRISIS DESPITE RECORD FIRST-YEAR REVENUE, OPERATORS WARN Albany — Major sports betting operators warned a joint legislative committee on Tuesday that New York's mobile sports betting market, which generated over $900 million in revenue in its first year, faces an unsustainable future under the state's 51 percent tax rate and is already showing signs of decline. Christian Genetski, president of FanDuel, and Jason Robins, CEO of DraftKings, testified before the Racing, Gaming and Wagering Committee that despite New Yorkers wagering approximately $16 billion in the market's first year, handle has declined more than 20 percent since the initial launch period. Robins noted that when accounting for promotional expenses, the effective tax rate reaches over 70 percent—the highest in the nation. "We do not believe that this level of economic success is sustainable with the current tax rate of 51 percent," Genetski said, adding that FanDuel has reduced its investment in New York by 50 percent compared to other states due to profitability concerns. Both operators projected dire consequences if the tax rate is not reduced: worse odds for customers, reduced promotional offers, limited marketing partnerships with sports franchises, and potential withdrawal from the market by smaller competitors. Robins warned that such conditions would drive customers toward illegal offshore operators that offer no consumer protections. The operators cited international examples, including France, which legalized sports betting at a similarly high tax rate and subsequently saw the number of licensed operators halve, resulting in a larger unregulated market. Robert Williams, chair of the New York State Gaming Commission, provided detailed testimony on the market's first-year performance, noting 806 complaints against 3.8 million accounts and 1.2 billion transactions. He confirmed that mobile sports betting is restricted to those 21 and older and discussed ongoing concerns about marketing to college students. Sen. Comrie expressed particular concern about protecting college students from sports betting, noting the tension between the 21-year age requirement and college students who begin at age 17. He proposed legislation requiring gambling advertisements to include warnings about addiction. Sen. Addabbo, the committee chair, questioned whether the current revenue projections are sustainable and expressed surprise that the gaming industry, responsible for generating billions in education funding, lacks dedicated budget hearing time. Both FanDuel and DraftKings endorsed Senate Bill 1962, which would lower the tax rate and add four to five licensed operators. Robins also advocated for legalizing iGaming, projecting it could generate $2.3 to $3.1 billion in gross gaming revenue in year one. The hearing underscores a critical policy tension: while New York's first-year numbers appear successful, operators argue the tax structure threatens long-term viability and consumer protection by pushing customers toward unregulated markets. New York's two dominant mobile sports betting operators testified before the Senate Racing, Gaming and Wagering Committee on Tuesday that the state's 51 percent tax rate is unsustainable and will force them to reduce consumer promotions, worsen betting odds, and cut marketing investments unless the rate is lowered. Jason Robins of DraftKings and Christian Genetski of FanDuel, who together control approximately 90 percent of New York's mobile sports betting market, argued that the high tax rate is driving customers to neighboring states and illegal betting markets. They presented models showing that lowering the tax rate would generate sufficient market growth to produce more total state revenue despite the lower rate. Sen. Joseph Addabbo, the committee chair, was highly skeptical of their arguments. He repeatedly challenged the operators to provide credible data showing that a tax rate reduction would not harm state revenue, noting that generating an additional $600 million in betting handle would be required to offset lost tax revenue if the rate were reduced from 51 to 35 percent. "That seems like a lot of money," Addabbo said. Robins and Genetski acknowledged they knew the 51 percent rate when they entered the market but argued that circumstances have changed. They said they made aggressive initial investments betting on a future tax reduction, but cannot sustain unprofitable operations indefinitely. Robins noted that New York's market is not growing year-over-year like other states at similar maturity levels, and that New Jersey continues growing faster in its fourth or fifth year. Assemblywoman Carrie Woerner expressed skepticism about the operators' growth projections, noting that achieving the $600 million in additional handle would require more than doubling the current number of bettors from approximately 932,000 to 1.37 million adults. "Color me skeptical," she said, questioning whether there is sufficient untapped demand to justify the operators' claims. The hearing also examined the effective tax rate operators pay when accounting for promotional spending. Robins explained that under current rules, operators are taxed on promotional dollars they distribute to customers, resulting in an effective tax rate of approximately 72 percent rather than the stated 51 percent. He argued that allowing operators to deduct promotional expenses, as some other states do, would be more efficient than reducing the headline tax rate. The testimony comes as S1962, which would reduce the tax rate and potentially increase the number of licensed operators, awaits consideration in the budget process. Addabbo indicated the committee will use the hearing to inform budget negotiations but emphasized that any change must be justified with credible data showing fiscal benefit to the state and education funding. NEW YORK'S MOBILE SPORTS BETTING MARKET SHOWS STRONG FIRST-YEAR REVENUE BUT FACES TROUBLING SECOND-YEAR HEADWINDS, INDUSTRY ANALYSTS WARNED LAWMAKERS TUESDAY. The Racing, Gaming and Wagering Committee heard testimony that New York generated $1.35 billion in gross gaming revenue from digital sports wagering in 2022—exceeding prior projections by 23 percent and establishing the state as the nation's largest sports-betting market by per-capita volume. However, analysts from Spectrum Gaming presented data suggesting the market may be losing momentum, with per-capita wagering handle declining 21 percent between the first quarter and the remainder of the year. David Isaacson of Spectrum Gaming attributed the slowdown to operators reducing promotional spending in response to New York's 51 percent tax rate—the highest among competitive markets. "Under the current gaming tax structure, operators will continue to limit promotional spending," Isaacson testified. "In year two it is possible that the New York market could actually decline in terms of overall wagering volume, putting the state's tax revenue at risk." The testimony sparked debate among committee members. Assemblyman Pretlow challenged the analysis, arguing that Q1's inflated numbers—driven by operators like Caesars dumping $300 million in promotional spending—made year-to-year comparisons unfair. He noted December 2022 achieved $2 billion in handle without incentives, suggesting the market remained healthy. Sen. Addabbo similarly pushed back, contending New York had reached a higher revenue ceiling than other states by Q4 and therefore shouldn't be directly compared to their trajectories. Industry representatives from DraftKings and Light & Wonder urged lawmakers to consider iGaming legalization, arguing it would generate substantially more tax revenue than sports betting. Howard Glaser of Light & Wonder projected New York could generate $2-3 billion in annual iGaming revenue, yielding $400 million to $640 million in annual taxes depending on the rate. He noted that six states with iGaming generated nearly twice the tax revenue of 30 states with only sports betting in 2021. Testifiers also highlighted that illegal iGaming currently captures approximately $600 million to $1 billion annually in New York—money lost to offshore operators and the state treasury. Glaser emphasized that iGaming has not cannibalized brick-and-mortar casinos in other states; rather, it has driven growth. New Jersey casinos grew 9 percent last year despite robust iGaming competition. The hearing underscored a central tension in New York's gaming policy: the state's high tax rate generates substantial immediate revenue but may be unsustainable for operators and could suppress long-term market growth. Lawmakers indicated iGaming would be the subject of future roundtable discussions. NEW YORK STATE SENATE REVIEWS MOBILE SPORTS BETTING'S FIRST-YEAR IMPACT, HEARS WARNINGS ON PROBLEM GAMBLING Albany — A joint hearing of the New York State Senate Racing, Gaming and Wagering Committee on Tuesday examined the first-year performance of mobile sports betting and its budget impact, with testimony revealing significant concerns about problem gambling services and a stark funding gap. The hearing heard from James Maney, executive director of the New York Council on Problem Gaming, who delivered pointed criticism of the state's allocation of resources to combat gambling addiction. Maney testified that while mobile sports betting generated $700 million in revenue in its first year, less than 1 percent—approximately $6 million, which grew to $12 million based on wagering activity—was dedicated to addiction services and prevention. Maney cited a 25 percent increase in calls to his facilities and warned that the 18- to 24-year-old demographic represents the highest percentage of problem gamblers in New York State. He noted that his daughter, turning 21 next month, "doesn't know one 21-year-old boy that doesn't have an app for mobile sports gambling." He criticized risk-free bet promotions as mechanisms that encourage "chasing losses," one of nine diagnostic criteria for pathological gambling. "We give less than 1 percent," Maney said. "Other states get 2.5 percent, 3 percent. Why aren't we? Are not our folks deserving of it: safeguard, protection, prevention, education?" Maney recommended that if the original 3 percent allocation had been implemented, approximately $21 million would be available for prevention, treatment, and education—enough to place educators on every college campus and fund a major public awareness campaign. He advocated for 24/7 live operator services, noting that gambling crises "change in an instant" and that callers at 3 a.m. currently reach voicemail. Sen. Joseph Addabbo, the committee chair, acknowledged that many of Maney's recommendations had been incorporated into the mobile sports betting statute, including account caps and credit card usage limits. He engaged Maney in detailed discussion about how future iGaming expansion funding should be allocated, emphasizing that "it's not how much money we put toward addiction, it's how it's spent." Assemblyman Jeff Gallahan raised a critical gap in public awareness, asking Maney how ordinary citizens could identify warning signs of gambling addiction in friends and family. Maney responded that the lack of public education was itself the problem, contrasting the extensive advertising by betting companies like FanDuel and DraftKings with minimal public health messaging about problem gambling. The hearing also heard testimony on iGaming implementation from Michael Pollock and Howard Glaser, who discussed how online gaming expansion could be structured within New York's constitutional constraints limiting gaming to licensed casinos. The Office of Children and Family Services reported that $5 million in youth sports and education funding authorized under the mobile sports betting statute is being distributed through county youth bureaus to serve underserved children ages 6-18. Assemblyman Keith Pretlow indicated the committee would examine whether current funding levels for 24/7 problem gambling services are adequate, noting that the state has "the revenue" to spend more wisely on addiction services.