NY Sports Betting Market Update - October 2022

NY Sports Betting Market Update
Published by NYSB Staff
Last Updated: 15. Nov 2022.

The summer betting lull appears to be behind New York’s nine legal sportsbooks with the start of the regular NFL season swelling the number of wagers being placed. As fall progresses, weekly handles have returned to levels not seen since the spring but remain some way short of the astronomical numbers seen in the early weeks of legal sports betting in the state when it was launched in January 2022.

September saw $1,256,704,042 taken in sports wagering handle against a gross gambling revenue figure of $143,332,889. Those figures were up by approximately 44% for both on August’s numbers. As well as the NFL campaign now being in full swing, betting companies are eyeing a strong MLB postseason as well as the onset of regular competitive games in the NHL and NBA.

NY sportsbooks also tend to rely on strong showings from local teams to swell their income so when the Buffalo Bills, New York Giants, and New York Jets perform well and set about covering the spread as they have done recently, then the interest of New Yorkers in their performances peaks as does the amount of money wagered on them.

Diminishing sign-up offers and the high tax rate applied to New York sportsbooks appear to be the main drivers behind modest weekly increases in handle though through October. Operators are taxed on promotional spending too which also explains the steadily falling generosity of betting offers being pushed by the sportsbooks. Caesars is perhaps the most notable example of this, launching in New York with a $3,000 deposit match for new customers that has now been revised down to $1,250. Others have followed suit or nigh-on removed their welcome bonuses.

Another notable trend of late is the high hold rate being achieved by the betting operators. That is the value of loss rates for bettors. The average hold rate nationwide tends to hover around the 7% mark but in the last couple of months, betting providers in New York State have seen theirs sit in double digits most weeks.

Online Sports Betting Handle Share 

FanDuel, Caesars and DraftKings continue to be the top mobile betting operators in New York State. The trio are responsible for over 80% of New York’s sports wagering market share with FanDuel at around 35%, DraftKings at 25% and Caesars with 20%. Handle for each has remained buoyant though offset by slight declines in revenue.

In September, Market share for the rest - BetMGM, BetRivers, PointsBet, WynnBet, Resorts World Bet and Bally Bet - stood at approximately $18m. BetMGM is the biggest operator outside of the ‘big three’ with a 12% total share of betting revenue in the state. Overall, the nine legal operators contributed just over $73 million in tax to the state coffers in September.

New York’s 51% Betting Tax Rate

The New York Governor’s office predicted that some $357 million would be raked in through betting tax returns for the financial year 2022-23 but that projection looks like being easily surpassed with over $200 million already paid by the sportsbooks to the state since the legalization of betting.

With observers still suggesting that sports betting operators will struggle to turn a profit given the 51% tax rate levied on them, lobbying to reduce that percentage is rearing once more aimed at the State Legislature when it resumes in the new year. Certainly, the legal sportsbooks were fully aware of what is the highest tax rate in the country but increasingly they simply aren’t able to invest in promos and advertising drives. The previous highest tax rate in the US had been Pennsylvania at 36% until both New York and New Hampshire set their level at 51%.

There have already been failed attempts at an amendment such as increasing the number of legal operators in a bid to then lower the tax rate. Global gambling giants such as Bet365, Fanatics and Bar Stool, who all failed to secure licenses during the initial competitive bidding process could revisit attempts to enter the New York sports betting industry should the tax rate be lowered. That scenario would also bring a rush of new ads, customer incentives and additional license fees. However, there are betting companies operating elsewhere in the country who have indicated that given their observation, they’re quite glad they never did enter the New York betting sphere.

The outlook is far from bleak, however. Sports betting activity in New York State remains relatively strong and handle should peak once more with packed fall fixture schedules leading into big events around Thanksgiving and the Christmas period. Much may depend on the forecasted tax projections as the end of the fiscal year nears come April 1st 2023.

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