Many aren’t happy with the online sports betting structure set up in New York.
Ken Wachtel, chief business officer for the NHL, became the latest executive to drive that point across.
“Tax rates that are 51% aren’t going to be helpful,” Wachtel said at the Sports Business Journal Conference in New York. He offered insight into US betting expansion and what he’s keeping his eyes on from the NHL’s perspective.
“I know a lot of sports betting operators sit there and say the same thing.”
Growing belief that NY sports betting operators won’t make money
Earlier this week, the New York State Gaming Commission accepted nine operators for license at a 51% tax rate. There is concern within the industry that the operators won’t make any money given the massive tax.
“I don’t think a single operator will make money in New York,” said Penn National CEO Jay Snowden, whose consortium was not selected.
Neighboring New Jersey, for example, has an open competition and a 13% tax rate for online sports betting operators. New York policymakers wanted a similar model, but then-Gov. Andrew Cuomo and his administration had other ideas. Cuomo hired NY director of budget Robert Mujica, who has been leading the process. Mujica was kept in place by Gov. Kathy Hochul.
New York Assemblyman Gary Pretlow made a last-ditch effort to change the process to an open competition. But his effort was quickly rebuffed. The process was too far down the road, and the state’s legislation was not yet in session.
Bettors could get lesser promos and lines as a result of the massive tax. As a result, customers turn to neighboring states or illegal bookies. New York State Sen. Joseph Addabbo has said having a premiere product is imperative for keeping New Yorkers betting in-state.
Some in the industry project the state, given its population and appetite for sports, could make $500 million or more annually off online sports betting in New York.
Pro teams in the Empire State are quickly getting in on the action. For example, Madison Square Garden, the New York Knicks and the New York Rangers agreed to a multi-year sports betting partnership deal with BetMGM.
Other notes from Sports Business Journal Conference
Eric Foote, chief commercial officer for PointsBet, thinks in-play betting could make up 75% to 80% of the operator’s bets in three years. PointsBet has a partnership with NBC Sports, and the two sides continue to amp up in-play betting on the golf front. In the US, in-play makes up 30% of bets versus well-established Europe’s 70%.
Wachtel noted the NHL is looking to ramp up its own in-play betting structure with help from SportRadar’s puck and player tracking data.
Brian Angiolet, chief media officer for DraftKings, spoke about the potential future for BetCasts. This feature allows bettors to stream games on the apps. Such configurations are popular overseas.
“I think there’s a couple things here — as we all know live rights are expensive. So I think getting into that game, dominoes have to fall for non-traditional companies to want to get into that and make it economically viable. I think that’s definitely a consideration in the future.”
In his previous tenure at Verizon, Angiolet worked on the deal for mobile rights for the NFL.
“Them thinking about opening up a class of rights dedicated for that probably is what enabled us to economically do a deal like that,” he said. “And then also for them to be confident that not only are they getting maximum reach with their traditional rights, but this might give them a window into a new audience.
“If leagues see it that way and companies like ours can create the right customer experience for it, that would also give us the economic structure to take it to market in an effective way.”