Legal mobile NY sports betting becomes a reality Saturday, with four sportsbooks approved to go live at 9 a.m.
Five more NY sportsbook operators will be close behind, launching as they are ready.
In the meantime, here’s what we will be monitoring in the brand new market.
1) Will NY sports betting offer same bonuses as other states?
A state launch is usually a bonanza for customers, as operators pepper them with free bets. In the first two months of Arizona sports betting, operators dished out as much free money as they made in gross revenue (~$31 million.)
Will New York sportsbooks be as generous despite the onerous 51% tax rate? Maybe initially, as operators try and scoop up players, but don’t be surprised if they cut back on promotions over time.
DraftKings CEO Jason Robins hinted as such at an investor conference at the end of last year.
“I think you adjust, so we’ll run less promotions [in NY],” Robins said. “We’ll spend less in the long term on marketing. Early on, we’re going to approach it the same way.”
FanDuel and DraftKings both offered $1000 sign-up offers in NY, with Caesars Sportsbook at $3,300. Will those offers stick around?
2) Can NY sportsbooks make money?
It depends on whom you ask.
MGM Resorts CEO Bill Hornbuckle said “time will tell how much money can be made.” Penn CEO Jay Snowden said in November that nobody was going to be profitable in New York.
“I think it’s just going to be a margin killer,” Snowden said. “I think it’s going to be an EBITDA detractor.”
Penn and its Barstool Sportsbook brand, of course, did not get a license.
But DraftKings said it expected to turn a profit in New York on the same 24-36 month timeframe it projects in other states.
Scale is key. All operators are going to have some fixed costs, so those with a bigger market share can cover those more readily.
3) How will New Jersey and Connecticut be affected?
Analysts estimate around a quarter of New Jersey sports betting revenue comes from New Yorkers. Likewise, more than one-third of CT sports betting volumes come from the southwestern border with New York.
Those two states could both see a 20+% drop in revenue next year.
That said, VIP customers might still be chauffeured across those borders to bet with better promos for them and a better tax rate for the operators.
4) Will the NY sportsbook market structure change?
Put another way: will New York ever see more than nine operators or a lighter tax rate?
That is not out of the question, given this structure was put in place by now-departed Gov. Andrew Cuomo.
New York Assemblyman Gary Pretlow is one influential politician calling for a more open market.
“I know what’s going to happen,” Pretlow said late last year. “Five years from now [the operators] are going to come back and say: ‘We’re not making any money, we need a tax decrease because this isn’t working,’ and they’ll go back to the Pretlow-Addabbo plan.”
Operators playing a long game might be better off racking up losses initially so they can go back and ask for more favorable conditions in a couple of years.
5) Will there be lawsuits against NY sports betting?
That was the expectation when the nine winning bidders were announced last November.
The Kambi-Fanatics-Penn National bid that missed out could reasonably argue they would grow the market while only dropping the tax rate to 50%. That might have been a net positive for the state’s tax take.
“I would look forward to it [a lawsuit], to tell you the truth,” Pretlow said in November. “I haven’t had conversations with anyone in that regard but that’s always an avenue that people can take.”
A successful lawsuit could potentially see the legislation rewritten in favor of a more open market. That said, all license bidders signed waivers saying they would not dispute the results.
Anti-gambling push?
Finally, will any private parties challenge the constitutionality of the sports betting law, as happened with DFS?
New York interprets betting as taking place at the four upstate casinos, since that is where servers are located.
That legal standing is not necessarily bulletproof given recent rulings in states like Florida, although that ruling dealt directly with tribal casinos. Initial dispatches from tribal interests in New York indicated some appetite for challenging New York’s new law, but nothing has come from those first reports.
