New York Mobile Sports Betting Market – How the Scene has Changed

Author: Matthew Haynes

In our New York sports betting impact article, we discussed the announcement of New York's regulatory approval for mobile sports betting just over 12 months ago. New York state democratic senator Joseph Addabbo Jr said at the time: "This is big. Once we enter the arena, we'll eclipse New Jersey".

That is a bold statement. They say that timing is everything, and the 'city that never sleeps' roared into life after launching mobile sports betting on January 8, at the height of the NFL playoffs and in the midst of the NBA, MLB, and NHL seasons.

In just three weeks, the state smashed the previous record for a monthly sports betting handle, with a total betting handle of $1.6 billion. The precedent was set. It was a sign of things to come and, come they did.

The kicker for the state is the 51 percent tax rate that operators are required to pay - there were some early doubters that were skeptical about how many companies would be put off by this, though the state was overwhelmed with license applications. Even then, there was the suggestion that the market would not be quite as receptive this early on its lifecycle, though this was quickly dispelled.

Numbers do not lie. Four consecutive months saw the state record a betting handle that exceeded $1 billion (February: $1.5bn, March: $1.6bn, April: $1.3bn). In the first three months, the state made over $170 million in taxes from mobile sports betting, while New York State Governor Kathy Hochul had previously set expectations of $250 million for 2022 and $1 billion within three years.

Decline in Figures but Not Expectations

The second quarter of 2022 was a period of consolidation in New York, though this is perhaps a relative understatement. It still saw the state pull in figures that far surpassed the GDP (Gross Domestic Product) of a significant number of nations in the months that followed.

Indeed, a year-low betting handle figure at the time in May of $1.26 billion, was for that month still considerably eclipsed well-established neighbor New Jersey ($766 million), which itself fell by 17 percent from its April figure, while Pennsylvania brought in $493 million and Michigan $356.1 million.

Throughout the summer, New Yorkers continued to show a keen betting interest, despite the NFL, NBA, and NHL seasons all coming to an end. Understandably, this had a knock-on effect from a betting handle perspective; June saw figures slip further to $1.05 billion, while July witnessed its worst month yet - that's if you can call $805 million disappointing.

Much anticipation surrounded the start of the NFL season that was due to kick off in September; its August figure of $877 million was hardly a surprise.

Throughout the summer, every operator in the state was preparing itself for what was to come. Each was competing for a considerable share of what had started to prove to be one of the most lucrative in the US sports betting industry, though, for some, there was still quite a lot of work to do.

With both the NFL and NBA seasons close to starting again, August needed to be a month of highly tactical planning - everything had to go right - especially for those operators that had the "Lions' share" of the market. From promotional campaigns to customer sign-up offers, media partnerships, marketing execution, and even hiring strategy, this would all play a part in helping to make sure that each operator did not leave any money on the ever-expanding New York table.

Industry analysts were waiting with bated breath to see how the New York sports betting market would perform for the rest of the year, indeed whether January's record would be broken and what effect a full sporting calendar would have on the market.

The Key Players in the New York Market

After the first couple of months of the New York betting market becoming regulated, there were clear leaders in terms of sportsbook popularity, with FanDuel, DraftKings, and Caesars effectively dominating the landscape, thanks largely to reputation and effective branding, though BetMGM (a joint venture between UK conglomerate Entain and MGM Resorts International), was not far behind.

Without a doubt, the number one in the marketplace is Flutter Entertainment-owned FanDuel, who have proven over the last year that they are a force to be reckoned with in the online sports betting scene. Such is the effectiveness of its operations and the executive committee in place that leads the way in almost every state in the union.

In June, Flutter announced that it had seized 51 percent of the New York market - a staggering number, considering the amount of competition that it faces, though this, in part, can be attributed to a significantly high hold rate of 9.6 percent (November 2022), since the sportsbook launched operations in the state in January. To put that into perspective, Caesars was at eight percent, while DraftKings had recorded a figure of 7.6 percent.

From January to November, FanDuel generated a New York sports betting handle of $5.2 billion and a $501 million GGR (Gross Gaming Revenue). To provide an illustration of how significant this is, the state's respective figures during this period stood at $12.97 billion and $1.06 billion.

DraftKings, meanwhile, responded stubbornly after seeing a poor start to its time in New York, with a scattergun customer acquisition strategy reportedly largely to blame for below-par figures. Despite this, the company recovered well, generating a handle of $3.49 billion and $265 million in GGR during the same period. Caesars Sportsbook, meanwhile, recorded $2.3 billion and $183 million, respectively.

However, there is one to watch. BetMGM has been quietly putting foundations in place, following a strong and progressive year industry-wide, where it has performed strongly in multiple markets across the US, including Michigan. Industry insiders are predicting that the brand can be the one to really challenge FanDuel's crown across the US in 2023, though to what extent it can do so in New York remains to be seen.

Can the State Continue Its Upwards Trajectory?

On most insiders' minds is what the New York market might do over the next 12 months after such an impressive first year, and this throws up a number of possibilities. Currently, there are nine different online sportsbooks available in New York, with these mainly being US-based, with the exception of Australian firm PointsBet, which is gradually gaining a foothold in the US.

Based on the market figures for 2022, no doubt other companies will be fighting for an opening in the Big Apple state, especially European-based brands; however, this does present a number of challenges. By law, any online sportsbook is required to partner with a land-based casino or racino (racetrack that offers betting terminals), and, such is the difficulty of getting such an affiliation in New York, there may be considerable hurdles for any foreign operators that have designs on such an achievement.

The figures speak for themselves. Quite clearly, there is a market for mobile sports betting, aided by the fact that the state plays home to over a dozen popular sports franchises - some of which are global brands in their own right.

A statement at the close of the year from Addabbo Jr essentially parrotted his prediction a year earlier, in which he played up the benefits that the regulation of mobile sports betting had brought to the state: "It has been a remarkable, record-setting first year for mobile sports betting in New York, with only nine professional operators," he gushed.

Indeed, during the first nine days of mobile sports betting being made legal in the state, $600 million was wagered by eager enthusiasts.

While initial concerns that operators would be put off by the 51 percent tax rate (the highest in the country) appear to have dissipated, there can be no doubt about the economic benefits that this has had for the residents of New York.

Over the course of the last year, much change has been made to infrastructure with a considerable amount of money invested. In October, it was revealed that $2.2 billion would be allocated to improving public transport in New York, providing more and better options to those living in each of the different boroughs. Arguably, without the revenue from online sportsbooks, this figure is likely to have been much lower. Affordable housing projects and the education system are reported to have been targeted for improvement over the course of the next year, and the gambling industry is likely to be a major contributor.

Sports with the Biggest Impact

There is no doubt that all eyes will be on the NFL close-season playoffs over the next month, which culminates in arguably one of the biggest and most-watched sporting events in the world; the Super Bowl.

From a revenue generation perspective, this can be major, and New York could well set another record. It is also a great opportunity for brands to form some of their most creative promotional campaigns to date in order to attract as many customers as possible. An event as big as the Super Bowl can be a difference-maker for sports betting brands if they get their offers and promotions right, potentially catapulting them to the top of the market.

In March, the MLB (Major League Baseball) begins again, with New York boasting one of the biggest franchises in world sport, the New York Yankees, which are understandably responsible for a sizeable betting handle.

NBA is one of the most watched sports in New York, with the state playing home to numerous popular teams, all of which attract substantial betting interest - this is one sport that industry insiders will be watching closely from a betting performance perspective, especially with the season very much still in full swing.

What will be interesting is to see how much impact the 2022 FIFA World Cup (soccer) had on betting figures in December, with many sportsbooks likely to have anticipated this being somewhat of a money-spinner following ever-increasing interest in the sport throughout the US.

New York's Flushing Meadows tennis venue plays host to the last major tournament in the calendar (the US Open), so it will be interesting to see if any major betting partnerships materialize with this over the course of the next few months - this could represent a big opportunity, especially with the emergence of young US talent in the sport.

Rewind back one year, and it seems almost folly that there were some commentators in the industry that were hesitant to make major predictions about the New York mobile betting market - the heavy tax rate no doubt playing on their minds and whether major sportsbooks would continue to see the value and play the long game. Addabbo Jr can confidently hold his head high and is likely to be a key ambassador for the industry in the state and somewhat of an influential figure over the next few months.