Assembly Bill A4856, sponsored by Assemblymember Gary Pretlow and 14 co-sponsors, would have phased New York's 51% sports betting operator tax down to 25% over a four-year period. The bill was held without action in the Assembly Racing & Wagering Committee on May 21, 2026, ending its 2026 prospects.
This is the fourth tax-reduction attempt since the 2022 mobile sports betting launch. The state's licensed operators — FanDuel, DraftKings, BetMGM, Caesars, ESPN BET, BetRivers, Fanatics, BallyBet, and Resorts WorldBet — have collectively spent more than $14 million on lobbying for rate reduction since 2022. The 51% rate has held.
What A4856 Would Have Done
The Pretlow proposal had two principal mechanisms:
- Phased rate reduction: 51% in 2026 → 42% in 2027 → 35% in 2028 → 30% in 2029 → 25% in 2030 and after
- Promotional deduction floor: Operators would be allowed to deduct up to 35% of GGR in promotional credits (currently capped at approximately 12% effective deduction)
The fiscal note estimated the bill would reduce state revenue by approximately $510M annually at the 25% terminal rate, partially offset by an estimated $190M in increased handle (from larger promotional spend acquiring new bettors). The net annual revenue impact at the 25% terminal rate was projected at -$320M to -$390M.
Why It Failed
The state's fiscal posture is the dominant factor. New York's 2027 budget gap is currently projected at $9.4 billion. The Hochul administration's revenue strategy is firmly anti-tax-cut; the May 2026 cycle saw the administration push back on multiple rate-reduction proposals across various sectors.
Beyond the macro-fiscal posture, three specific objections held A4856 in committee:
- Education funding tie: A meaningful portion of sports betting tax revenue flows to the state K-12 education funding formula. Reducing the rate would require either reducing education aid or replacing the revenue from another source — neither was politically palatable.
- Off-track-betting (OTB) opposition: The five regional OTB corporations argued that operator-tax reduction would intensify competition from mobile sportsbooks at the expense of OTB-operated retail wagering. The OTB lobby is small but effective in the Pretlow committee specifically.
- Public-perception risk: "Tax break for billion-dollar gambling companies" is a politically unattractive frame, particularly during a budget-gap year. Multiple Democratic committee members cited the optics directly.
The Operator Lobby Response
Within 24 hours of the committee hold, the New York Online Gambling Coalition (the trade group representing the licensed mobile sportsbooks) released a statement: "We remain committed to working with the legislature to align New York's sports betting tax structure with competitive market norms. The 51% rate is unsustainable long-term and will eventually drive operator consolidation or market exit. We will return in 2027 with a refined proposal."
The "market exit" language was new. Through 2023 and 2024, the operator lobby framed the rate as economically suboptimal but operationally viable. In 2025-2026, the framing has shifted to existential — specifically pointing to PointsBet's 2023 exit and Wynn BET's 2024 exit as evidence the rate is driving smaller operators out.
Operator Margin Reality
Per the publicly-filed Q1 2026 reports of FanDuel and DraftKings:
| Operator | NY Q1 2026 GGR | NY Q1 2026 Tax Paid | NY Effective Margin (est) |
|---|---|---|---|
| FanDuel | $278.4M | $142.0M | ~8-12% pre-tax operating margin |
| DraftKings | $197.1M | $100.5M | ~6-10% pre-tax operating margin |
| BetMGM | $52.6M | $26.8M | ~2-5% (near break-even) |
| Caesars | $57.4M | $29.3M | ~3-6% |
| ESPN BET | $27.8M | $14.2M | negative (loss-making) |
| BetRivers | $17.4M | $8.9M | ~1-3% (near break-even) |
| BallyBet | $5.4M | $2.8M | negative |
| Resorts WorldBet | $1.9M | $1.0M | negative |
FanDuel and DraftKings remain modestly profitable in New York at the 51% rate. The remaining seven licensees range from near-break-even (BetMGM, Caesars, BetRivers) to deeply loss-making (ESPN BET, BallyBet, Resorts WorldBet). Two licensees have already exited (PointsBet 2023, Wynn BET 2024). One or two more exits are plausible in the 2026-2028 window if the rate holds.
What This Means for NY Bettors
The 51% rate's persistence means the licensed New York sportsbooks will continue to ration promotional value aggressively. NY welcome bonuses will remain at the $150-$300 bonus-bet level rather than the $500-$1,500 cash-match levels common in lower-tax states. The offshore market will continue to serve a meaningful share of high-promo-value seeking bettors.
If you have a strong preference for licensed-NY play with regulated player protections, your best value is FanDuel's Bet $5 Get $300 bonus bet promo and DraftKings' equivalent. If your priority is maximizing realized welcome value, the offshore market is structurally better — see our sports betting hub for the active NY-accessible toplist.
For deeper analysis of the 51% rate's structural effects, see our NY sports betting tax guide.