Recent reports suggest that Penn National Gaming’s Barstool Sportsbook could face long odds trying to fit into New York’s future mobile sports betting picture, but if so, PNG President and CEO Jay Snowden sounds like he won’t be losing any sleep over it.
Snowden told investment analysts on a quarterly earnings call Thursday morning that the state’s planned tax rate exceeding 50% is a “margin killer” that makes it hard for anyone but the state itself to make money.
“I don’t think anybody’s going to make money operator-wise,” he said. “Objectively speaking, you’d rather be in [New York] than not be in, but if it’s one of the states you’re not in, you’re not crushed by that either.”
His company’s Penn Sports Interactive, which runs the Barstool Sportsbook, is part of a group bid for licensed New York sports betting operations led by B2B provider Kambi and also including Fanatics, which would be new to sports betting.
Sources told Sports Handle and the New York Post, however, that the New York Gaming Commission is close to approving a bid from a different Kambi-led consortium, which in that case includes Caesars Entertainment, Wynn Resorts, PointsBet, Rush Street Interactive, and Genting.
That group is reportedly one of two that could have their bids accepted as soon as this week, with the other being a consortium of FanDuel, DraftKings, BetMGM, and Bally Bet.
Also no tax deductions for promotional credits
The gaming commission recently put out a matrix with a sliding scale of state tax rates, dependent upon the number of licensed operators, but in most cases the rate would be above 50%. Only New Hampshire currently imposes such a tax rate, at 51%, but that is through a monopolistic arrangement with DraftKings that enables it to avoid any competition for sports bettors.
Snowden noted that unlike some states in which Barstool Sports operates, New York will not be deducting from taxation the amount that operators disburse in promotional credits to attract customers. That will be a further hindrance to any profitability among the sportsbooks, he said.
“New York has its own prerogatives, and if we’re in, we’ll play by the rules,” he said. “If no one can make money, we’ll lose the least, because we can tap the Barstool audience organically.”
Penn National has emphasized repeatedly that it doesn’t need to spend money on the type of commercial advertising done by competitors, as its part-ownership of the Barstool Sports media company enables it to use that entity’s well-known personalities to promote its sportsbook at no cost.
The hope among operators and supporters of mobile betting in New York is companies will be approved and able to launch by the Super Bowl in February, although no official assurances of that have been offered.