Like most major sports teams based in states with legal mobile sports gambling, the Yankees — who have partnership deals with FanDuel, DraftKings, and Bally Bet, among other relationships — have a stake in making sure the industry thrives in the long run.
For that to happen, one prominent Yankees executive thinks New York will have to lower the 51% tax rate it is charging the sportsbook operators. The state’s tax rate on gross gaming revenue of mobile operators is tied with New Hampshire for the highest in the nation.
Proposals to lower the rate — either through re-writing the law or by adding more licenses — didn’t make it into the current state budget and will be pushed off until January, at the earliest. In earnings calls and other public appearances, multiple sportsbook executives have bemoaned the New York tax rate, locked in by then-Gov. Andrew Cuomo.
Yankees President Randy Levine said he has had conversations with sportsbook operators that lead him to believe the tax rate makes it impossible for them to turn a profit in New York.
“From the Yankees’ perspective, we were on the forefront of pushing this argument for it, saying it’d be great for the taxpayers, which it has been,” Levine told NY Online Gambling. “But you can’t put people in a position where they’re losing tens of millions of dollars. We’ve established here in New York that it works. The volume far exceeds anywhere else. But what does it matter if companies can’t sustain it?”
Levine also would like to see New York law changed so that operators aren’t taxed on betting promotions, which, in some cases add no revenue to the sportsbooks’ bottom lines. He thinks they’ll eventually be unable to advertise their products in the state because of the heavy tax burden they’re carrying.
“That hurts people like us and makes no sense,” he said. “Why continue to tax at a rate you know eventually is going to kill the industry? It makes no sense.”
A stake in Coney Island project
For now, the Yankees’ only sources of revenue from gambling are the advertising dollars they take in from the operators and the revenue from partnerships with FanDuel, DraftKings and Bally Bet.
They also stand to benefit from a Coney Island proposal for a full-service downstate casino through their 20% stake in Legend Hospitality, which is working on a project with Joe Stitts’ Thor Equities to land one of the three downstate licenses from the New York State Gaming Commission. That puts the Yankees in a head-to-head battle with Steve Cohen’s Mets, who are trying to land a casino license themselves to build one next to Citi Field in Queens.
Most gambling industry leaders expect two of the licenses to go to existing racetracks with video-gaming terminals in Yonkers and Queens, but the third is up for grabs. Levine said the team has no stake in a proposal by Bronx Assemblywoman Amanda Septimo to work with an operator to build a casino in the Hunts Point neighborhood of the Bronx, less than three miles from Yankee Stadium.
Eventually, Levine said, the team would like to add either a brick-and-mortar sportsbook or betting kiosks to Yankee Stadium, but the team is waiting for word that it can legally do so.
For the moment, the awarding of the three casino licenses and efforts to change the mobile sports gambling laws to expand the menu and add more operators — potentially lowering the tax rate — are the main thrust of politicians when it comes to gambling in the state.
A changing relationship with gambling
That the Yankees even have a gambling strategy speaks to the rapid changes Major League Baseball and its teams have gone through since PASPA was struck down in 2018. In the early 1990s, Yankees owner George Steinbrenner received a lifetime ban — later overturned — for hiring a New York gambler named Howard Spira to dig up dirt on Dave Winfield, with whom Steinbrenner was having a salary dispute. Spira later served 22 months in prison for trying to extort Steinbrenner after claiming he didn’t receive the money he was promised.
“For many, many years in baseball, gambling was completely off limits,” Levine said. “It was really frowned upon and people got disciplined in different ways, but I think it all changed as technology changed and as the general population changed. The advent of technology, and especially smartphones, and the advent of companies like DraftKings and the other fantasy companies led to everybody getting used to playing games online.”
Levine, echoing comments made by Commissioner Rob Manfred, also thinks baseball offers a unique opportunity to gamblers because of its slower pace than many sports. Already, operators are offering live betting on the result of certain pitches, and Levine thinks in-game betting will lead the way in the long run.
“You can bet on the total runs, you can bet on when the runs will score, you can even break it down into what kind of pitch is the pitcher going to throw? Is the batter going to strike out?” Levine said. “That leads to fan engagement and it’s all part of what I believe is the emerging technology world, which includes fantasy, video games, all that stuff. This is just a natural extension. And the fact that it’s an increased revenue source is very, very good.”