08/23/2013 4:49PM

New York to add 5-cent fee to bets made with out-of-state companies

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SARATOGA SPRINGS, N.Y. – A law set to go into effect Jan. 1 in New York will require out-of-state account-wagering operators to pay a 5-cent fee for every dollar wagered through their operations by a New York resident, with the brunt of those fees going to their New York competitors.

The law, which was contained in a bill passed earlier this year dealing with casinos in the state, will explicitly allow out-of-state account-wagering operators to take bets from New York residents for the first time. State law had previously been unclear on whether out-of-state operators could legally take bets from New York customers. Still, most large account-wagering providers began taking bets from New Yorkers within the past five years, if not earlier.

The law calls the 5 percent fee a “market-origin fee,” and it will be applied to any wager made by a New York customer, regardless of whether the customer is betting on a race at a New York track or an out-of-state track.

Account-wagering companies typically retain 10 to 20 cents per dollar wagered.

The most prominent account-wagering operators that will be affected by the fees are twinspires.com, TVG, and XpressBet, the three largest such operations in the United States. The money raised by the fee will be required to be deposited in an account maintained by the state, with distributions determined by a set of statutory formulas.

Courtney Norris, a spokeswoman for Churchill Downs Inc., which owns twinspires.com, said the company would not comment on the legislation or the fees. Officials for TVG and XpressBet did not return phone calls Friday.

Lee Park, a spokesman for the New York State Gaming Commission, which regulates racing in the state, said that the commission provided “technical assistance” on the bill because of a report it prepared in 2012 analyzing account wagering in New York. Park said the language in the bill was agreed to “by all OTBs, harness tracks, and Thoroughbred tracks.”

Under the law, 40 percent of the money provided by the fee will be distributed to the state’s five offtrack betting companies. Another 50 percent will go to the state’s racetracks, including the New York Racing Association, Finger Lakes, and the seven harness tracks operating in New York. The state will retain the remainder.

NYRA and Finger Lakes will receive 60 percent of the share that goes to racetracks, with the state’s harness tracks receiving 40 percent. It is unclear how that ratio was determined. According to the New York gaming commission report, account-wagering handle in 2011 on New York Thoroughbred races was $193 million, compared to $18 million on harness races, a more than 10-to-1 difference.

NYRA will retain “5/6ths” of the amount going to NYRA and Finger Lakes, according to the law. Forty percent of NYRA’s share will go toward purses, 20 percent will go toward breeders’ awards, and the remainder will be retained by NYRA.

All told then, NYRA – which operates the three largest Thoroughbred tracks in New York – will receive 10 percent of the money distributed from the fund.

NYRA officials declined to comment on the legislation this week.

NYRA and the state’s five offtrack betting companies all operate their own account-wagering operations. The levy of the 5 percent fee will likely put the out-of-state operators at a competitive disadvantage compared to their in-state competitors by squeezing their profit margins on New York bets.

Paul Matties More than 1 year ago
They have no idea how much this bill will ruin the business of horse racing. The handles will drop in grave amounts.
thomas More than 1 year ago
This will ruin racing and handles WILL plummet. rebates will be slashed in half by this idiotic law. In turn handle WILL suffer, NYRA has idea that bettors will go directly through them, totally WRONG, the money will be out of circulation. Everybody cries about rebate bettors having an unfair advantage over everybody else, i never understood that. If i bet more i SHOULD get a rebate. Every state will adopt this LAW and handles will start plummeting all over the country. Good job politicians, no clue.
Sal Carcia 9 months ago
With 20% of the U.S. handle being made by rebate players, it has resulted in an increase the effective takeout to the nonrebate players. I have seen reasonable estimates showing an increase of 4% in takeout to the nonrebate players. It is a parimutuel pool and if someone wiins more, then someone on the other side loses more. Maybe, you do deserve a discount, but it cannot be ignored that it comes out of another player's pocket. This is mainly due to the increase in play of the rebate players.
long_shot_alert More than 1 year ago
You know what gets me, where was the reporting on this? DRF?
long_shot_alert More than 1 year ago
Throw Chris Kay your nickels if you see him at Saratoga.
Sal Carcia More than 1 year ago
This bill will only discourage betting in NY. Many of the ADW players will not make the switch and will bet less if the surcharge is passed on to them. Also, this will discourage TVG and HRTV from promoting NY racing. NY racing will be given less priority during their broadcasts. It will also discourage the ADWs from running marketing promos on NY tracks. This move is shortsighted. But what can one expect from politicians combined with and an industry with short-term thinking.
Larry Rhinehart More than 1 year ago
Every new idea state officials and horsemen dream up is bad for business. Would be nice if they could come up with changes that would increase attendance and handle.. Sadly , the business model of those in charge does just the opposite.
Ryan Cale More than 1 year ago
i don't think it is an additional tax on your bets. i think it is supposed to come from the account wagering sites takeout that they normally would keep as profit. so instead of keeping 12-20% of every bet as their fee, they will have to give 5% to NY. It is basically like reducing the account wagering sites takeout (sort of like a rebate but the money goes to NY instead of the bettor). i can't imagine that the account wagering sites will try to pass the 5% on to their clients....but this is horse racing, where the bettors that support the entire industry are treated like walleyed bastard step-children.
Marty Brink More than 1 year ago
I believe New York tracks already have the highest purses in the nation. Can't be happy with the millions they're already raking in, they have to gouge the little bettor for a nickle on the dollar. Works for the Airlines and the Banks, and they're making billions, they're thinking,we might as well gouge the customers too.I agree with Patricia Doyle.
Patricia Doyle More than 1 year ago
Frankly, if the nickle fee was going to help the horses, i.e.a retirement account that would be used to upkeep retired horses I would not mind. But NY State? Hell no. NYRA and state officials are probably going to get raises now. I think it stinks. They should have retirement accounts for aging horses. I like what Suffolk downs does and how they are helping to place retiring horses. Maybe I will start to gamble up there. I like the mid Atlantic circuit anyway. I like Delaware, Parx and in the Winter I like Charles Town. When NY state is done taking bettors money the feds then are figuring out how to income tax the rest of it. I play the horses for a living. This augments my SS check. I am seriously thinking about going back to work as a groom. Golden years, ha. Cant even bet the horses in NY without NY digging into our pockets. It stinks.
Randy Atkins More than 1 year ago
everyone should quit betting N.Y. tracks...they usually have 20-30 scratches a day and you have to re-handicap races which takes forever....they are doing everything they can to get people to quit betting