New York Governor Kathy Hochul has recently unveiled a new budget proposal that could change the way betting works in the state. A major part of the proposal is the removal of a long-standing system known as “penny breakage” and the introduction of a flat tax on betting handles. This proposal aims to simplify how taxes and bets are handled in New York’s racing industry, making it easier for bettors and race organizers alike.
What is Penny Breakage?
Penny breakage is a system where a bettor’s winnings are rounded down to the nearest nickel, meaning they lose a small amount of money each time they place a bet. For example, if a bet would pay $2.13, it might be rounded down to $2.10, resulting in a three-cent loss. This system has been around for a long time but is now considered outdated by many people in the racing industry.
Governor Hochul’s proposal aims to end this system in New York. The goal is to provide a more straightforward way of handling winnings so that bettors receive the exact amount they win, without any rounding down. This change is expected to help both casual and serious bettors by giving them a fairer payout and improving their experience.
How Will the Proposal Change Betting in New York?
Along with removing penny breakage, the proposal includes a new “flat tax” system for betting handles. A “betting handle” is the total amount of money bet on a race or event. Currently, tax rates for these betting handles can vary depending on the type of race or time of day. Governor Hochul’s plan aims to simplify these tax rates into a flat, consistent rate across all races and bets, which could make it easier for bettors and businesses in the industry to understand and follow.
This change in tax rates and breakage rules could help New York’s racing and betting industries grow by making the process simpler and fairer for everyone involved. It would also put New York in line with other states, like Kentucky, which already adopted penny breakage in 2022, and Emerald Downs, which introduced it last year.
Support for the Proposal
The New York Racing Association (NYRA), which oversees many of the state’s horse races, supports the proposal. Pat McKenna, the Vice President of Communications for NYRA, praised the move, calling the removal of penny breakage a “common-sense step.” He believes this change will help improve the betting experience for New York’s racing fans and make the industry more modern and competitive.
What Happens Next?
Governor Hochul’s budget proposal is now in the hands of New York’s state lawmakers, who will review it and decide whether to approve it. If passed, the changes could begin soon, improving the way racing and betting are managed in the state. This could set an example for other states to follow in updating their outdated systems and making betting more transparent and fair for everyone.
New York’s governor has proposed some big changes to the state’s betting and racing laws, focusing on simplifying tax rules and ending penny breakage. By removing outdated systems and making taxes more straightforward, this proposal aims to improve the betting experience for everyone involved, from casual fans to professional bettors. The decision now lies with state lawmakers, and if approved, it could change the way horse racing works in New York for the better.
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