New York racetracks will start using penny breakage for payouts made with betting accounts starting Sept. 1 as the result of language tucked into a massive state budget package signed into law by New York Gov. Kathy Hochul on Friday.
The language eliminates a handful of calculations that are presently used to determine breakage in New York and instead rounds the payouts to the nearest penny, with a provision that would allow for nickel breakage for on-track wagers. Breaking on-track payouts to the nickel would ease the burden for mutuel tellers on cash transactions.
New York will join Kentucky and Washington as the latest state to adopt penny breakage. The practice will return slightly higher payouts to bettors, though the effect of penny breakage has significant gains for large bets made in the straight pools, especially on favorites.
The New York Racing Association supported the language, arguing that the widespread use of betting accounts made earlier breakage policies obsolete. Payouts for bets made on account-wagering platforms are automatically credited to players’ balances.
While most jurisdictions use 10 cent breakage for rounding, New York adopted a tiered structure in the mid-1990's that used 5 cent breakage on lower payouts with higher breakage rates for higher payouts. That tiered structure was designed to be both beneficial to bettors and revenue-neutral to the parties that received shares of breakage.
The budget package also included several other provisions beneficial to New York racing, including a reduction in the pari-mutuel tax paid by New York tracks that is estimated to save the tracks $5 million annually and the creation of an advanced diagnostic screening program at Cornell partially funded by NYRA.
As a result of the language modifying the tax rates for bets, the tax rate for wagers made by out-of-state account-wagering companies will increase. A large portion of the revenue from those increased tax rates will go toward the Cornell diagnostic program, which will use state-of-the-art equipment to direct research toward better diagnoses of musculoskeletal injuries.
NYRA is currently in the midst of a complete reconstruction of its Belmont Park on Long Island. The track is expected to be ready for racing in the fall of 2026.
“By funding transformational equine safety research, modernizing the economics of the wagering marketplace and achieving long-sought relief for the betting public, the [fiscal year 2026] budget positions the sport for continued success,” said David O’Rourke, the chief executive of NYRA, in a statement. “Along with the initiatives guaranteed through this budget, NYRA is constructing a new Belmont Park to fulfill the vision set forth by Governor Hochul and legislative leaders in Albany. We appreciate their consistent support as we look forward to a new era of Thoroughbred racing in New York.”
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