Just how lucrative is the New York online sports betting market?
Investment firm Morgan Stanley is extremely bullish on the industry’s potential.
In a Wednesday report, the Wall Street analysts said NY online sports betting has the potential for revenues of nearly $2 billion.
As per the Morgan Stanley report:
As we highlighted, the implied market revenue run rate is $1.9B, well above our prior $600m 2022 forecast and $1B 2025 forecast.
Morgan Stanley bullish on NY sports betting future
Morgan Stanley’s optimism stems from New York online sportsbooks reporting a staggering $603.1 million in bets over the state’s first nine days featuring legal online sports betting (Jan. 8-16).
The report also notes:
While only 4 operators were live in the first (9) days of the NY market, it still showed how the leading players dominate, with DraftKings, FanDuel and CZR at 98%/99% of handle/GGR, with sub-scale RSI at just 2%/1%.
It is important to mention, however, that launches are oversized. And the run rate might get pulled back.
New York has definitely shown the early potential to become the No. 1 sports betting market in America given its population size (20 million) and rabid professional sports fandom.
Yet the early boom can at least somewhat be attributed to significant promo and advertising spend. And the question will be sustainability once the sports calendar shifts and the promos and ads begin to lessen.
Super Bowl, March Madness, playoffs: Oh, my
The Feb. 13 Super Bowl and March Madness will provide a significant buzz in New York. Then comes (hopefully, CBA pending) the MLB season, and the NBA and NHL playoffs.
It’s certainly understandable why Wall Street would be optimistic in its projections. It’ll be interesting to see how those projections compare to the actual data down the road.
As Sen. Joe Addabbo has said, the state likely needs around six to eight months before it can get a clearer picture of how the market is performing.
Addabbo is hoping that local bettors not only switch to bet legally in New York, but he’s also hoping the product is good enough that they want to stay there, rather than go back to neighboring states or their illegal bookies.
New York has projected $249 million in online sports betting revenue (including $200 million in already collected license fees) for the fiscal year 2022. Revenue projections rise to $357 million in FY 2023, $465 million in FY 2024, $493 million in FY 2025, $509 million in FY 2026 and $518 million in FY 2027.