The Empire State set several US records in its first year featuring legal online NY sports betting.
In 2022, legal online New York sports betting, which launched Jan. 8, 2022, set industry benchmarks for yearly handle ($16.2 billion), total gross gaming revenue ($1.36 billion) and tax revenue ($693 million.)
“It has been a remarkable, record-setting first year for online sports betting in New York with only nine operators,” Sen. Joe Addabbo told LSR.
“I’m grateful to have joined others in the state in putting for a product that New Yorkers deserved, and appreciate the benefits to our economy, in addition to educational and addition program funding.”
NY sports betting by month
NY online sportsbooks surpassed $1 billion in handle in 10 of 12 months, including $1.62 billion in December.
The Empire State also holds US monthly records for handle ($1.67 billion in January), total GGR ($148.2 million in November) and tax revenue ($72.6 million in November..
Sunday marked the one-year anniversary of legal online sports betting in NY. Gov. Kathy Hochul has continued to tout the record tax revenue raised by legal online sports betting, with 98% of that money going to education.
Cuomo claims tax revenue victory
Ex-Gov. Andrew Cuomo had been against legalized online sports betting, but changed his stance under the condition a massive tax rate be implemented to enable the state to increase its coffers.
Nine operators willingly agreed to a 51% tax rate, in addition to a one-time $25 million license fee, so they could acquire market access in NY. They have complained ever since, but a reduction is unlikely.
“What usually happens is that the industry buys the politicians and the end result is not in the best interest of taxpayers,” Rich Azzopardi, spokesman for the former governor, told LSR via email.
“They definitely tried to do with the Legislature in New York and also pushed dozens of stories claiming that our taxing structure was unworkable. Governor Cuomo didn’t believe the hype, pushed and passed his plan and the record revenues continue to prove the special interests and the pols wrong.”
NY sports betting operator breakdown
FanDuel was the dominant sportsbook, leading all NY operators with a 40% market share ($6.5 billion) and a 48% revenue share ($650.5 million.)
DraftKings was second with a 28% market share ($4.5 billion) and a 26% revenue share ($354.6 million).
Caesars, after getting off to a massive start due to its $3,000 bonus, finished third with a 17% market share ($2.8 billion) and a 16% revenue share ($214.6 million).
BetMGM, which launched Jan. 17, came in fourth with a 8.3% market share ($1.3 billion) and a 6% revenue share ($81 million.)
The ‘big four’ NY operators combined for 93.3% market share and 96% revenue share in 2022.
The rest of the rest
That means PointsBet, BetRivers, WynnBet, Resorts WorldBet and Bally Bet combined for 6.7% market share and 4% revenue share.
Notably, Bally Bet, which didn’t launch until July 7, had only $338,000 in revenue.
Can smaller sportsbooks survive?
Naturally, there are questions about the long-term viability of those five operators.
One industry investor told LSR:
“This is a big year for small operators that can no longer access capital markets to fold into larger operators or go out of business. This is also a big year for attempts at one-stop shops like Fanatics to see how successful the cross-sell, fly-wheel can work.”
The owners of BetRivers and Resorts WorldBet have brick and mortar casinos in the state.
NY casinos can help?
Meanwhile, the owners of Wynn Bet and, it is expected, Bally Bet, will be vying for downstate licenses.
Still, it is reasonable to wonder whether those operators are candidates to be acquired via M&A or drop out of the market entirely at some point.
Bet365 missed securing a NY license last year. Meanwhile, the Fanatics bid alongside Barstool Sportsbook-Penn Entertainment was denied. Those entities could make a second attempt, though a longshot tax reduction might be necessary for that to happen.
Tax reduction highly unlikely
Executives from FanDuel, DraftKings, Caesars and BetMGM have criticized the 51% tax rate, which they say impedes their path to profitability in the state, thereby prohibiting market growth.
Still, even the legislator who unsuccessfully pushed for a reduction last session, probably won’t give it another shot in 2023.
“I tried to make it go away because I thought (the tax rate) was exorbitant,” Assemblyman Gary Pretlow told LSR. “But the operators are doing it, so I’m not going to take from education for them to make more money. So I’m pretty sure it will (stay).”
Pretlow also discounted the idea of operators obtaining a deduction on their promotional spend.
“That’s probably not going to happen,” Pretlow told LSR.
Expanded NY sports betting menu?
However, the 2023 state legislative session began last week, and Pretlow told LSR he has designs on introducing bill language to allow for bets on individual player award futures such as MVP, Coach of the Year, and Cy Young.
“I want to add more opportunities to get closer to what they do in (New) Jersey,” Pretlow told LSR. “There are too many bets you can’t make. I want to include those type of things.”
The state, though, is unlikely to move off its ban on in-state college teams.
Pretlow also plans to revisit the legislation to add in-stadium betting kiosks. Additionally, he’s hoping to bring back off-track betting (OTB) parlors to NYC.
