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Study: NYC's Airbnb ban costs $500M

Airbnb hosts in New York City could generate a half billion dollars each year by renting out their homes to tourists, according to a new analysis, but that money will likely disappear under the state’s new penalties targeting short-term rentals.

The business-friendly American Action Forum calculated the price of short-term rentals in the city and found that Airbnb hosts have the potential to earn $500 million each year. They did not account for empty rooms that remain unfilled on any given night.

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“Even in New York City, half of a billion dollars is still a lot to wipe out,” Will Rinehart, director of technology and innovation policy at the American Action Forum, wrote in the report.

New York banned residents from renting out their homes for under 30 days in 2010 but raised the fine last Friday to as much as $7,500. This could affect not only Airbnb hosts, but also other short-term rental websites like VRBO and HomeAway, according to the report.

Critics of Airbnb say the short-term rental website is raising the cost of living in New York City, but others point out it provides economic opportunity to residents and feeds tax dollars into the state and city coffers.

Airbnb is challenging the law in court.