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New York Legalizes, Taxes Mixed Martial Arts


 Madison Square Garden: the first MMA event is scheduled.

The list of combative sports legal in New York and subject to New York’s tax on ticket sales is about to get longer.

Mixed martial arts have been outlawed in New York since 1997.  But beginning September 1, 2016, these previously prohibited combative sports will be permitted in the state of New York (when conducted under the supervision of the New York Athletic Commission or an authorized sanctioning entity). A match at Madison Square Garden has already been scheduled for November 12.

This is a big deal, and the debate that preceded the enactment of Senate Bill 5949 reflected that. According to the Wall Street Journal, lawmakers discussed slavery and traumatic brain injuries, fight clubs and violent videogames, and even pornography (MMA is “gay porn with a different ending”).

In the end, mixed martial arts were legalized — if for no other reason than that they’re legal in most other states. Eric L. Adams of the Brooklyn Borough noted that New York’s old policy was a form of “economic development for every state but New York State.” The lack of legalization also prevented the imposition of safety requirements over unregulated, unsupervised amateur MMA competitions. Many in the industry are pleased that legalization brings additional regulations, such as a requirement for health insurance that covers life-threatening injuries. Legalization will also create tax revenue.

Enter Taxman

A tax on “gross receipts from ticket sales” imposed on any “authorized combative sport held in this state” goes hand in hand with legalization. The tax is not entitled to “any deduction whatsoever for commissions, brokerage, distribution fees, advertising or any expenses.” The rate is 8.5% of gross receipts from ticket sales and 3% of the sum of gross receipts from broadcasting rights and gross receipts from digital streaming over the Internet” (“except that in no event shall such tax imposed… exceed $50,000 for any match or exhibition”).

State and local sales and use tax also may als­­­o apply to other costs associated with the promotion and execution of these events, such as advertising and printing. However, the law stipulates that tax is not imposed on gross receipts from “any professional or amateur boxing, sparring or wrestling exhibition or match” (exclusive of any applicable federal taxes).

According to the Governor Cuomo’s office, the tax is expected to generate “more than $137 million in economic activity in New York State once at full programming capacity.” It should bring in $5.4 million in state and local taxes annually. Additional economic benefits are also expected.

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photo credit: Madison Square Garden, NY via photopin (license)


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.