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New Yorkers bet an estimated $837 million in New Jersey last year without downstate sportsbooks or mobile NY sports betting.
That estimate comes from the research firm Eilers & Krejcik Gaming. That handle translated to $57 million in revenue, meaning New York lost about $6 million in tax revenue.
Those figures are considered conservative estimates, the firm wrote. While states could take up to five years for sports betting markets to mature, the outflow from the lack of NY sports betting could follow similar trends.
That suggests New Yorkers could put up $1.56 billion in NJ sports betting by 2022 if the state doesn’t add mobile wagering or downstate casinos. That would equate to $105 million in sports betting revenue and $11 million in tax revenue.
Sports betting apps in New Jersey launched soon after the fall of the federal ban in the summer of 2018. New York continues to lag 18 months later after its legislature failed to approve mobile last year.
Retail sportsbooks in New York operate under a 2013 law approving their presence within four state casinos. Mobile wagering might be permissible according to some lawmakers, but Gov. Andrew Cuomo does not agree with that read on the statute.
Assemblyman Gary Pretlow and Senator Joe Addabbo are advocating for including mobile NY sports betting in the budget proposals of their respective chambers this year.
That $837 million in handle represents 18.3% of New Jersey’s record $4.58 billion in handle for 2019. The state is off to a hot start this year as well, with $540 million in January handle, up 40% from last year.
Tracking where New Jersey sports bettors are logging in helps illustrate the contribution from New York.
The Eilers & Krejcik report points to one significant piece of data to show the outflow of betting to New Jersey: unique user logins from 12 p.m. to 10 p.m. on Super Bowl Sunday.
The data provided by the geolocation firm GeoComply shows significant logins in Hoboken, NJ. That’s home to Hoboken Terminal, a major transportation hub that connects New York City and New Jersey.
The logins from Hoboken, with a population of 55,000, were significantly higher than those near Jersey City and its population of 270,000.
“The willingness of so many New Yorkers to engage in such travel despite the availability of illegal betting options that can be accessed within New York strongly suggests that New York consumers are clamoring for a legal, safe alternative to bookies and offshore sportsbooks and that consumers are willing to expend time and energy in order to choose a legal product,” authors Chris Grove and Chris Krafcik wrote.
The vast majority of revenue from sports betting in New York – up to 96% – could come from mobile. But adding downstate casinos will maximize overall revenue, according to the study.
New York currently has four commercial casinos and three Indian tribes that offer gaming. That would equal seven online gaming licenses, which could lead to $970 million in online sports betting revenue. Total revenue would be $1 billion, with $119 million in tax revenue to the state.
That’s if the tax rate is set at 12% for online and 8% for retail. Bumping that online tax rate to 15% would drop online revenue to $911 million and total revenue to $946 million.
Operators would have less to spend on marketing and promotions at the higher tax rate, the study said. Still, the higher tax rate would lead to $139 million in tax revenue.
Adding three casinos in and around New York City would bump total sports betting revenue to $1.4 billion, the study suggests.
Online revenue would be $1.2 billion, or 85%, thanks to the three additional online licenses. Retail becomes a bigger part of the picture by adding those physical sportsbook locations near the city.
With online taxed at 12% and retail at 8%, tax revenue from sports betting would hit $166 million. The state would also get an additional $36 million in license fees should the state charge $12 million per license.
All of those scenarios are much better than what New York currently has to offer. The four upstate casinos combined for just $1.9 million in revenue during January, according to official reports filed with the state.
Not all of that projected revenue is coming from in-state bettors.
Eilers & Krejcik estimates anywhere from $51.7 million to $66.9 million could be attributed to tourists and commuters.
On the high side with 10 online betting licenses, New York’s 287,270 commuters would contribute $43 in revenue each, or $12.3 million annually. The 42 million annual tourists would contribute $1.30 each, or $54.6 million.