A new report and data from New York gaming regulators on daily fantasy sports illustrates just how important legalization was to the industry.
What we learned about New York and DFS
An article from the Albany Times-Union detailed revenue figures from the New York State Gaming Commission regarding paid-entry fantasy sports.
New York enacted a law legalizing and regulating fantasy sports in August, taxing gross revenue from sites like DraftKings and FanDuel. The Times-Union reported on revenue from the time that law took effect to January. In that period, the state generated $2.8 million in tax revenue.
The more interesting information might be the metrics that can be gleaned about the size of the DFS market in New York. More rom the T-U:
Taxes were collected on more than $18.6 million in gross revenue that companies reaped in New York during that period. …
In total, the data show New York operators — including industry titans DraftKings and FanDuel — took in nearly $180.4 million in entry fees from New York players …
Legal Sports Report later obtained the raw data, which you can see here.
New York as a piece of the overall revenue pie
The Times-Union reported that that $180 million figure as roughly 10 percent of all DFS revenue generated by the industry over that same timeframe.
That generally falls in line with an estimate from Eilers & Krejcik Gaming, putting handle for worldwide DFS at $3.2 billion for all of 2016.
The realization here is that DFS would have taken quite a hit without the New York, which is not that much of a surprise. New York is one of the largest states in the country in terms of population and the DFS userbase.
Before the passage of the law last summer, DraftKings and FanDuel had pulled out of the state. Without a new law on the books, that status likely would have persisted.
That would have meant FanDuel, DraftKings and other operators would have missed out on that revenue during the busiest time of year for DFS — NFL season. And the reduced liquidity would have had an effect beyond New York, as well.
DFS not exactly a windfall for New York
Roughly $3 million is nothing to sneeze at, and it doesn’t account for an entire year’s worth of revenue from DFS.
But DFS barely moves the needle in terms of revenue in New York, whose state budget will likely be on the order of $150 billion for the coming fiscal year.
It also points to the fact that New York is missing out on revenue from other forms of gaming that currently take place in the state via offshore sites. The state is considering legalizing online poker, but not online casinos.
To wit, the NJ online casino market far outpaces the market for DFS in New York, a much larger state:
Noteable: #NY DFS operators had gross revenue of ~$18m in 5 months, per NYSGC data. #NJ #iGaming operators, meanwhile, had same in 1 month.
— Chris Krafcik (@CKrafcik) March 3, 2017
New York and DFS regulation
New York is putting some of that regulatory muscle to work in the wake of a DFS site going bankrupt. Fantasy Aces, which had a temporary license in NY, somehow spent $1.3 million of players’ funds.
In the wake of that, regulators have asked all sites with a license for proof that they are properly segregating player funds from operational funds.
