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Saturday, December 14, 2013

New Years Shafting

Typically, you will find in the newspaper on January 1 an article explaining what new state laws  take effect that day.  Well, if you are a New York ADW customer that uses a non-racetrack approved ADW, there is a good chance you got one notice early.

Starting January 1, out of state ADWs that do business in New York will be required to pay a 5% tax on every dollar wagered by a New York State resident regardless of where that wager is placed.  So if I lived in New York and had such an account, my ADW would have to pay 5% of my wager amount to New York whether or not I wagered on Yonkers Raceway or wagered on Will Rodgers Downs.  This fee (call it a tax) is being called a market origin fee. 

Under the legislation, 50% of the fee will be divided amongst the remaining OTBs in the state, 40% to the racetracks (24% to the thoroughbreds, 16% to the harness tracks), and 10% going to the state (let's call it a handling fee).  What is ironic is that the OTBs get a share at all, being they have been nothing but the bane of racing in New York since their inception.

Obviously, the goal is to force New Yorkers back to OTB or the track's individual ADW systems by cutting or in some cases eliminating the rebates these out of state ADWs pay their customers because while the ADWs are responsible for the fee, rest assured it will come out of your hide.

Expect some ADWs to jettison their New York account holders, others to cut their rebate programs for New York residents as the state does the OTB's and track's bidding.

What would be great is if the major ADWs impacted by this decided independently to jettison New York signals, could you image how much handle would disappear.  Of course, this will never happen due to anti-trust considerations.

Lest we think New York is unique in making this type of decision, Illinois taxes their out of state ADWs, at least till January 31, 2014 and Pennsylvania has implemented a 10% tax on theirs.

Here is a novel thought, instead of implementing counterproductive fees, why not have your own ADW and OTBs compete on even terms and offer rebates.  It isn't as if they couldn't afford to as they would retain the lion's share of the commission.  After all, competing is what companies do in the United States.

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