It has seen record highs recorded in terms of its betting handle and tax revenues generated, but New York is now at its lowest point so far.
We covered recently how sportsbooks were heading for a seasonal slowdown, with a number of major sports heading into their summer breaks, however, the impact of this period has been much harsher than was expected.
Experts predicted that the ongoing NBA Finals combined with the current MLB season would be enough to encourage bettors to continue wagering. Nonetheless, without a New York team competing in the NBA Championship, it seems many have lost interest and the number of bets being placed has fallen.
Hitting a Year-Low
As of January, licensed and regulated operators have been legally able to launch their mobile sports betting apps for the first time. Things initially seemed promising: within months, New York became one of the most active states as the betting handle surpassed the $3 billion mark.
May saw the betting handle dwindle, though, as it plummeted to its lowest figure since the legalization of sports betting began in the state. At only $1.26 billion during May, it was 9.4% lower than in the previous month, when the betting handle was $1.39 billion.
Could It Force Operators to Pull Out of New York?
Lulls inevitably happen throughout the year, as many sports seasons operate at similar times. Naturally, when they end, a number of events become unavailable to bet on all at once.
Add that to the industry-high tax rate in New York that some operators are complaining about, it’s very likely that such pressures could lead to an exodus of operators. BetMGM’s chief financial officer Gary Deutsch stated the following at their latest investor day:
The specific problem in New York is that it has a high 51%[tax on] gaming revenue and that it applies that rate to ‘phantom’ revenue from promotional credits. That means that the real tax rate on net gaming revenue is well over 100%.
We simply can’t apply our capital against irrtional investment thesis. Players cannot continue to play if the house always wins, and the house cannot continue to play if it will always lose.
It’s Not All Bad News
Whilst the betting handle may be at an all-time low, there were actually some increases in gross gaming revenue for operators in May. Having hit $104.1 million in April, gross gaming revenue from mobile sports betting increased by 5.5% in May to $109.8 million.
It is still lower than in previous months, though, where it hit a year high in January at $124.1 million. However, it’s a positive sign that revenue has begun to increase instead of fall, as has become the recent trend.
Individual Operator Performances
In the month of May, Flutter Entertainment’s FanDuel was the top operator in New York. They handled $552.6 million in bets, which is just under half of the entire state’s total, generating $63.9 million in revenue.
In second place was DraftKings, which had earned $21.5 million in gross gaming revenue from $313.6 million of bets handled. With Caesars Sportsbook in third place generating $10.8 million in gross betting revenue from $192.7 million in bets handled.
BetMGM ranked fourth overall, with revenue posted of $7.9 million from $123 million in bets handled, and were followed by PointsBet, who had $2.9 million from $33.8 million handled, and Rush Street Interactive, which generated $1.8 million revenue from a $33.8 million handle.
The two operators with the worst performances overall were WynnBet and Resorts World: the first of those two handled just $9.8 million in bets, which generated $786,588 in revenue. Disappointingly, Resorts World performed even worse with just $6.7 million handled and $236,096 generated in revenue.
As of yet, BallyBet, which has been confirmed as an authorized operator in New York, is still yet to launch its mobile sportsbook operations. Nonetheless, it is expected they could launch within the next month, which could have an impact on the bets handled and revenue generated for other providers.