As the first of the four large “Holy Grail” states to expand into mobile sports wagering, there was plenty of pressure on operators and bettors in New York a year ago to meet expectations once it became clear that then-Gov. Andrew Cuomo would legalize it — even if it would not be his preferred state-run monopoly via lottery.
The application process settled upon by the New York State Gaming Commission made for strange bedfellows. One group approved had three of the industry’s heaviest hitters in FanDuel, DraftKings, and BetMGM, with Bally Bet rounding out the quartet. The other, which had multiple parties aligned under the Kambi betting platform, included Caesars Sportsbook, BetRivers, PointsBet, WynnBET, and Resorts World.
Bet365 was left at the altar having met the technical standards, but not doing enough to grow overall tax revenue for New York. PENN Entertainment, which runs Barstool Sportsbook, was left on the outside looking in. So was rapper and mogul Jay-Z, who aligned himself with Fanatics as part of a second application submitted by Kambi.
When nine approved operators were announced in November, the other ground-shaking part of it was the tax rate — all FIFTY-ONE PERCENT of it, an unprecedented figure for a competitive market in the still relatively nascent U.S. sports wagering betting space. New York would have the nation’s highest tax rate on operator revenue by a wide margin, with Pennsylvania a distant second at 36%.
Yet for all the grumbling from operators about the high tax rate, they willingly paid the price of admission to take their chances on the biggest market to date opening to them. Fast forward almost 12 months later, and there have been a few clear winners as New York has rewritten the post-PASPA record book when it comes to monthly handle, operator revenue, and tax revenue.
January: The emperor throws down gauntlet
There is something wonderful about launch month in a new market with various offers of risk-free bets, matching deposits, and other assorted giveaways as operators hope to land loyal customers and market share. Caesars opted for maximum chaos in the Empire State with an astonishing promotion of a $300 free bet in addition to matching a customer’s initial deposit up to $3,000. It was an unprecedented launch offer, one that CEO Tom Reeg had hinted in 2021 would be needed given the rebrand from William Hill.
Caesars got its short-term and long-term rewards, aided by the most exciting NFL postseason in recent memory. It snared more than 40% of the market share for handle in the first three weeks of live wagering in New York and totaled $487.4 million in the process. That lead was not sustainable, given the database depth of customers that FanDuel and DraftKings had amassed through daily fantasy play, but the effects of Caesars’ promotion remain visible. It is a strong No. 3 for handle in New York’s weekly reports and generated more than $2.6 billion handle through mid-December.
New York’s mobile debut was a smash hit in all key metrics, as the state grabbed the “triple crown” of monthly national records for handle, operator revenue, and state tax receipts. New York has recorded eight of the top 10 monthly handles in the post-PASPA era.
State Month Handle
NEW YORK January 2022 $1,686,263,898
NEW YORK March 2022 $1,644,789,642
NEW YORK November 2022 $1,564,164,673
NEW YORK October 2022 $1,555,051,187
NEW YORK February 2022 $1,534,078,893
NEW YORK April 2022 $1,396,791,941
New Jersey January 2022 $1,348,860,083
New Jersey October 2021 $1,303,198,342
NEW YORK May 2022 $1,269,862,570
NEW YORK September 2022 $1,265,023,090
February: The Super Bowl boosts business
The state gaming commission did not publish any event-specific press releases regarding handle, revenue, and operator performance for Super Bowl LVI, but the weekly overall report that included the game in which the Los Angeles Rams beat the Cincinnati Bengals 23-20 proved the event was plenty popular. The week’s $472.1 million overall handle is still the second-highest total of the year, trailing only the $572.6 million from the weekend of the NFL divisional playoffs round.
The 3.3% hold for Super Bowl week also tracked with other states showing bettors fared reasonably well. The $15.4 million in operator revenue ranked 39th of 49 weekly reports through Dec. 11, and it was one of just two weeks in the first 11 when revenue failed to reach $20 million.
March: NCAA tourney betting
Again, there’s no sport-specific data, but the weekly reports show that New York bettors were definitely ready to partake in something more than the customary $10 NCAA Tournament office pool. And some New Jersey bettors joined in the action as well, since they can’t wager legally on their in-state teams. They were now able to cross the Hudson to place bets on Seton Hall and tournament darling Saint Peter’s, which became the first 15 seed to reach the regional final by knocking off Kentucky, Murray State, and Purdue.
The week before the start of the NCAA Tournament and the week including the first two rounds generated a combined $834.4 million in overall handle, with each week topping $400 million to rank in the top seven overall. The Peacocks of Saint Peter’s strutted into the final weekend of March, and those riding the upset train for the week ending March 27 helped create a bottom-five weekly win rate of 4.3%.
April: The Final Four and MLB starts
Because the Final Four is played on a Saturday and a Monday, it impacted two weeks of NYS Gaming Commission reports. North Carolina, an unexpected national semifinalist as a No. 8 seed, extended the madness into April by ending the coaching career of Mike Krzyzewski with its elimination of eternal archrival Duke. The Tar Heels then lost in the championship game to fellow blue blood Kansas.
The two outcomes — plus Kansas beating Villanova in the other Final Four semifinal — put a notable drag on operator revenue. The week ending April 10 that included the tournament final had the third-lowest weekly hold to date at 3.9%; the hold for the week ending April 3 was 4.9%. When including the final week of March, it is the only time to date the Empire State had three consecutive weeks with operator revenue below $20 million.
May-August: FanDuel goes full Thanos
As mentioned earlier, it would be “when” and not “if” both FanDuel and DraftKings passed Caesars as market share leader for handle. FanDuel did so in late January, never looking back, but its presence in New York contributed to it being the first operator to achieve a quarterly profit in the U.S.
Being the first mover in “Same Game Parlay” offerings continues to have lasting ripple effects. It has been the primary source for FanDuel to separate itself from other operators when it comes to generating revenue. Again, the state commission does not provide second-level data, but between May and August, FanDuel posted a 10% or better hold in 10 of the 18 weekly reports — all on minimum weekly handles of $65 million that reached as high as $145 million.
During that same time frame, only PointsBet was able to match that frequency, but the Australian-based book’s top handle in that span was just under $13 million. FanDuel cleared $13 million in revenue four times in those 18 weeks while reaching eight figures another five weeks during what is the slowest time of the sports betting calendar.
September: Carnage from NFL’s start
August was a winning month for operators on a historic level in terms of the win rate — the 10.3% hold nationally was at the time the third-highest of the post-PASPA era and the highest of the decade. Then September rolled around, with Empire State bettors getting their first real taste of regular-season NFL wagering after being limited to the previous season’s Week 18 back in January.
Like much of the nation, bettors in New York were taken behind woodsheds from the Adirondacks to Albany, from Manhattan to Montauk, and from Staten Island to Syracuse. Seven of the nine operators — sorry, WynnBET and BetRivers — had at least one week in September with a 10% hold. Week 2 of the NFL season bloodied the public: FanDuel peaked at winning 16.1% on $109.2 million in wagers; DraftKings reached 12.8% on $105 million; Caesars nearly attained a 13% win rate on $41 million.
Despite the $296.7 million handle for the week ending Sept. 18 ranking 30th of 49 weeks, the $39.8 million in revenue ranks fifth, while the 13.4% hold is third all-time. The overall September hold statewide was just shy of 11.1%, slightly below the national mark of 11.7% that ended up just three-thousandths of a percentage point off the all-time high.
October-November: Big handles but …
At the start of the year, much was made about October offering the chance for New York to reach $2 billion in total monthly handle. After all, there were five weekends in the calendar month, which meant five NFL Sundays and five college football Saturdays.
But few could forecast the drag that might come from economic headwinds slowing the public. Though New York cleared the $1.5 billion plateau in handle for the fourth and fifth time in October and November, racking up more than $3.1 billion in wagers combined, there is a sense it was less than what could have been reached in a more optimistic economic landscape.
Revenue continued apace, however, as the 7% industry standard hold was little more than a suggestion. It has been 9.1% or higher every month since July, and October and November have brought consecutive U.S. monthly revenue records. With only Arizona outstanding for October, New York’s $146.8 million in total revenue accounted for 18.2% of the $805.9 million generated nationwide.
Looking into 2023
The turn of the calendar should see another strong early part of the year when it comes to handle with the NFL playoffs in January, including a potential uptick in handle should the Buffalo Bills reach the Super Bowl for the first time in 29 years.
Though the volume of college basketball games far exceeds those available for wagering in the NBA, betting on the latter could pick up dramatically during the winter if the New York Knicks become a playoff contender. They are trending in the right direction, currently at 18-13, and Knicks fans have been starved for postseason play, let alone success. New York has six playoff appearances in the 21st century and one postseason series win. Yes, there is another team doing well a borough over in Brooklyn, but few things move the New York City sports excitement meter like the Knicks playing well.
Those hoping for more operators in New York in 2023 will be disappointed, given how the nine currently taking wagers smashed even the highest-end tax revenue estimates in the first year. With two more weekly reports outstanding, the total is at $655 million — more than 30% above Cuomo’s much-derided claim that sports wagering would provide $500 million annually to the state’s education fund.
The gaming commission has the flexibility to add as many as three operators — all potentially on their own platforms — while keeping the tax rate at 50%, but it seems unlikely either side will have any sort of interest approaching critical mass to bring a 10th (or 11th or 12th) operator into play.
A second scenario could be a company like Fanatics buying out a smaller existing license-holder, but considering that newcomer will be part of the Ohio launch on Jan. 1, coupled with a non-conducive environment for mergers and consolidation at present, it seems unlikely.
But the overall sum of New York’s first year with mobile wagering was a positive one. It will set a single-year national record for handle and revenue, and it has the top spot for all-time tax revenue generated. The Empire State is already fifth for all-time handle post-PASPA, and it will likely move up to third place come this time next year when the thrill of the chase replaces the thrill of the launch.