Andrew Klebanow: Higher tax rates make sports betting unfeasible
In this interview with CalvinAyre.com’s Stephanie Tower, Andrew Klebanow of Global Market Advisors explains how hefty tax rates could ruin the U.S. sports betting market.
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All eyes are on the estimated $150 billion sports betting market now that the U.S. Supreme Court has struck down the 1992 Professional and Amateur Sports Protection Act (PASPA).
Even before the high tribunal gave its judgment, different states in the U.S. have already drafted, filed, and passed pieces of legislation allowing sports betting in their respective jurisdictions. One of the contentious issues discussed by lawmakers during their deliberations is how to tax sports betting operators.
Andrew Klebanow of Global Market Advisors cautioned states against imposing hefty tax rates on sports betting if they want to reap the benefits of the game.
“States must decide on a fair and reasonable tax rate, or an unfair and unreasonable tax rate—we are already seeing states taking both sides of that issue. Look at Pennsylvania, they’re proposing collecting a tax in excess of 30 percent. It makes sports betting unfeasible,” Klebanow told CalvinAyre.com. “At some point, the tax rate goes high that the game becomes unfeasible. In Nevada, I think they offer a tax of 6.75 percent on sports revenue win. And then there’s a federal excise tax of 0.25 percent on total wagering handle.”
Klebanow also expressed his disapproval on the so-called integrity fee that most professional sports leagues asks. The leagues, which once were unalterably opposed to sports betting, wants a fair share of the sports betting revenue as payment for expenses incurred for integrity operations. The problem with the integrity fee is that professional leagues are seeking compensation for the same product that they are providing when sports betting is still considered illegal, Klebanow said.
“So, they have no skin in the game and they don’t have risk simply because they are providing the same product they are providing yesterday, they would like to collect an excise tax of 1 percent,” the gambling analyst said. “It is truly unfair. They’re not taking any risk. They are providing the same products they provided yesterday, and now it is all about what we call, for the lack of better term, a money grab.”
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