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Originally Posted by classhandicapper
Could someone get to the bottom line on this so I don't have to try to understand the law and the ADW business model?
It seems to me they are building in a "potential" economic incentive for NY residents to bet through NYRA or the NY OTBs instead of other ADWs. The idea being to keep NY gambling money (handle) within NY because it's such a massive market.
Since those out of state ADWs will face additional charges when NY residents bet through them, they are less likely to offer "perks" to get or keep those NY customers.
I don't see it as a tax on players "unless" the out of state ADWs pass the cost along to customers in the form of lower rebates or fees (especially to NY customers). But even if that happens, if you are NY resident just open an NYRA account instead. The software is fine and they have rebates.
I'm not generally in favor of this kind of thing and it will probably suck some money out of the game if any of the costs are passed onto consumers, but on the flip side I can see why NY would want to keep the money at home and support it's own industry.
What am I missing?
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Short answer:
Source market fee means you are harmed as a consumer because:
1. The number of choices open to you are reduced because what would normally be an open competitive marketplace is transformed into a quasi-monopoly.
2. The "fee" part of source market fee raises prices at the wholesale level.
3. Higher wholesale prices translate into higher retail prices.
Bottom line: As a consumer you will find fewer places to shop and you can expect to pay higher retail prices for the same goods.
Grocery Store Analogy
Suppose for the sake of argument a nearly identical law had been passed in NY. But instead of out of state ADWs, the statute had been crafted to penalize out of state grocers.
Suppose for the sake of argument that you had been (for years) a VERY satisfied customer purchasing lunchmeat, cheese, bread, produce, etc. from a boutique corner deli that's part of a privately owned but well known small chain.
Let's also suppose for the sake of argument, that the Local Grocery Workers Union, a larger grocery chain or two, and maybe the Local Truck Driver's Union (all headquartered in the state of NY) get together and lobby the NY Legislature and Governor's Office to write a state law for them. The new law requires the following of ALL grocery stores whose corporate headquarters are located outside the state of NY:
1. Must obtain a "license" to do business in the state of NY. (Annual cost for the license $20k. As part of the "costs" related to obtaining a "license" must undergo a NY state approved "background check" initial cost $30k... Total cost to be "licensed?" $50K that first year.)
2. Must pay a new "market origin fee" (it's a tax) to a new "state fund." Taxable amount equal to 5 percent of sales made to NY residents.
3. From there, the new "state fund" shall distribute 40% of market origin and license fees collected to the Local Grocery Workers Union, the larger grocery chains, and the Local Truck Driver's Union who lobbied the Legislature and Governor's Office to get the new law put in place.
As a result of the new law, the owners of the smaller boutique corner deli chain (whose headquarters happen to be in Oregon) make a business decision.
They look at the combined costs of doing business in the state of NY... $50k in costs to obtain the 1st year license along with the ongoing 5% tax... a tax that their direct competitors do not have to pay... along with the added insult of watching a not insignificant percentage of the new costs they are required to pay simply be handed over to their direct competitors...
And they decide to stop doing business in the state of NY.
What does this mean to you the consumer?
As a consumer (whether you realize it or not) you have been harmed by this.
As a result of the new law: The number of choices open to you is negatively impacted.
The marketplace where you had previously been shopping was an open competitive marketplace.
As a result of the new law: That marketplace is now a quasi monopoly... a monopoly created by and for the benefit of those who lobbied for the new law... the Local Grocery Workers Union, the larger grocery chains, and the Local Truck Driver's Union.
Maybe you're ok with this... Maybe your brother in law is a union truck driver. Or maybe you never set foot in the boutique corner deli that is now a thing of the past.
On the other hand, maybe you would have really LIKED shopping in the corner deli had you discovered it.
At any rate, as a consumer, you have been harmed.
You cannot go to the corner deli because it is not there anymore. If you want to buy the same items... if you can find the same selection at all (and that's a topic worthy of its own thread)... you have to do so from the larger chains who lobbied for the new law.
And wonder of wonders, when you do finally shop the larger chains in hopes of finding the same selection you notice that the price is higher.
THAT'S what this new law is all about.
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And wonder of wonders, when you do finally shop the larger chains in hopes of finding the same selection you notice that the price is higher.
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I quoted that last part for emphasis because there's one more point I want to touch on.
A number of NY players have reported to me that NYRA Rewards is not (repeat not) offering rates commensurate with what had up until now been available to them at their corner deli.... make that ADW... where they had been happy satisfied customers for years.
-jp
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