ESPN Bet wants to join the online NY sports betting market, although its partner Penn Entertainment does not see a clear path to profit.
However, as of now, there is no way for that move to happen. All nine online NY sports betting licenses are currently spoken for.
“No one loves the tax rate in New York. But there could be opportunities in the short-term, medium-term to gain access to New York creatively, and those are the things we’re working on behind the scenes,” Penn Entertainment CEO Jay Snowden said during a Wednesday earnings call.
Penn, Snowden lament tax reality
On a 2021 Penn call soon after Barstool’s exclusion from the New York sports betting bid winners, Snowden said companies could not make money in New York.
“The state is going to make money. I don’t think a single operator will make money in New York,” Snowden said during his company’s latest earnings call. “So I’ve always struggled with that. Would you rather be in or not?
““I think objectively speaking, you’d probably rather be in than not be in. But it’s one of those states where if you’re not in, you’re not crushed by it either.”
How ESPN could secure NY license
Penn could obtain a New York sports betting license for ESPN Bet by acquiring an existing company, or working to change the existing legislation to add operators.
Fanatics Sportsbook found a pathway into the Empire State by acquiring the PointsBet US business. It will undergo a suitability review for licensure in New York before a decision is reached the NYS Gaming Commission in September.
Previously, legislative and lobbying efforts in New York to add operators and reduce the tax rate have been unsuccessful.
NY sports betting market domination
FanDuel (40.3% handle share) and DraftKings (30.5%) have dominated the NY online sports betting market, combining for nearly 71% of the lifetime share.
Caesars (15.4%) and BetMGM (7.8%) round out the top four. BetRivers (2.7%) is fifth and PointsBet (2.4%) is sixth.
Meanwhile, WynnBet (0.6%), Resorts World (0.4%) and BallyBet (0.1%) have combined for only 1.1%.
Key lawmaker open to expansion
Sen. Joe Addabbo told LSR on Wednesday that he is open to a conversation about adding ESPN Bet in New York.
“I always think the market for New York sports betting is so robust, and can include and welcome others that bring a certain amount of professionalism and success to the market. I’m always hoping to having that type of discussion,” Addabbo said.
“Does the state at some point look at how to improve its sports betting market both online and in-person? And does that mean tinkering or adjusting the tax rate by increasing the number of operators? It’s always a conversation that bubbles up during the budget session.”
NY sports betting tax rate set
The New York legislature has shown no interest in moving off its 51% tax rate for online sports betting. It reached the $1 billion lifetime tax revenue mark in May.
Either way, Snowden wants in.
“It’s really important to be a scale player, to have access to the states that matter. I don’t think anybody’s really making money in New York today. But I think from a database cultivation (standpoint), and hopefully down the road there’s opportunities to work with the state on a win-win scenario between the state and the operators to have a more favorable operator environment there,” Snowden said.
ESPN Bet also wants Connecticut
With its headquarters in Bristol, Conn., ESPN Bet also has its sights set on securing market access in Connecticut,.
The third and final online sports betting license in Connecticut is up for bid after BetRivers exited. FanDuel and DraftKings also operate in the state through partnerships with state tribes.
“We obviously would like to be in Connecticut,” Snowden said. “So we’ll see when that decision is made, and if we’re fortunate enough to be a new operator in Connecticut.”
LSR reached out to the Connecticut Lottery for comment but has not yet heard back.