What’s next for New York?
The launch of online sports betting in the Empire State on Jan. 8 has already proven to be record-breaking, with operators taking nearly $2 billion in bets over their first 30 days of business.
New York is expected to provide its Super Bowl handle on Friday, and could vie with Nevada ($179.8 million) for the top overall spot.
Operators have generated $138 million in total gross gaming revenue in New York, which has led to a record $70.6 million in taxes for the state (at a 51% rate) to use on education (98%), youth sports (1%) and addiction programs (1%).
Massive numbers and massive benefits for New Yorkers.
Still, questions remain about long-term profitability and sustainability for operators at that 51% tax rate.
As do questions about whether the lesser operators in New York can possibly compete with industry giants like FanDuel, DraftKings and Caesars, which used a significant advertising and promotional spend to gain the majority of the early market share.
What’s next for NY online sports betting?
This year alone, state policymakers are looking to expand NY online sports betting to include fixed-odds horseracing on the apps, as well as add kiosks to stadiums, arenas and racetracks in the state. That bill, sponsored by Sen. Joe Addabbo, passed through the New York Senate Racing, Gaming and Wagering Committee by a 7-0 vote. It will now go to the senate’s finance committee.
If passed, the bill could enable professional sports teams to open up sports-betting lounges that include kiosks. As a result, bettors would have the option to get a physical ticket in addition to using betting apps. Meanwhile, state policymakers also look to expedite three downstate casino licenses. This could potentially pave the way for an expansion into iGaming and online poker.
“Unquestionably, a very successful launch,” American Gaming Association president Bill Miller said during the AGA’s annual “State of the Industry” address. “I think it’s too early to tell what the tax rate is going to mean as New Yorkers begin the process of determining where they want to place their bets in a longer-term sense. But it’s an exciting first step.
“Certainly New Jersey had a great beneficiary to the fact that New York didn’t have the legal option for New Yorkers, and the PATH trains were filled on Saturdays and Sundays with people coming to Hoboken and Jersey City (to bet). So we believe things will rationalize in that general area.”
Miller then added: “But I think it’s too early to tell whether New York will sustain in the same way that launch happened.”
Several months before we see ‘normalization’
Addabbo is one of many to acknowledge that even if sustaining this pace doesn’t happen, the sky certainly isn’t falling. And with plenty of big events on the horizon — including March Madness, the NBA playoffs and the NHL playoffs — there will be plenty for New Yorkers to wager on (MLB labor dispute pending).
“I think that the other thing that we need to wait and see on is sort of the promotional credits and the spending,” AGA senior director of research David Forman said.
“New York just opened, so that’s been really heavy the first few weeks. But that’s not going to go on forever, so I think it’ll take at least a few months before we see sort of a normalization in New York and understand how it’ll shake out and impact other states, most notably New Jersey.”
So far, Caesars ($702.7 million), FanDuel ($632 million) and DraftKings ($454.9 million) have accounted for $1.79 billion of the $1.98 billion wagered by New Yorkers since the Jan. 8 online sports betting launch. That equates to about 90.4% of the market share. BetMGM will presumably compete with those giants given its stature. But others like PointsBet, BetRivers, WynnBet and the still-to-launch Resorts World and Bally Bet have a daunting challenge ahead.
“It is difficult as you see,” Forman said. “If you’re in New York, there’s a large advertising budget as people go out and fight for a market share right now. People have talked a little bit about consolidation trends in the industry, and speculated about how that’ll go. That might be one area to watch this year as things develop and the market matures. This whole market just opened up a few years ago and there’s a lot of players and we’re a ways from seeing it mature.”