Touchdown: New York to launch its much-anticipated online sports betting market in early January.
New York gambling regulators approved four companies to launch the state’s online sports betting market this weekend.
The New York State Gaming Commission has approved Caesars Sportsbook, DraftKings, FanDuel, and Rush Street Interactive to start accepting mobile sports wagers starting Jan. 8 at 9 a.m. Eastern Time.
In November of last year, the Empire State’s gambling authority approved online sports betting licenses for nine operators. The remaining five companies, Bally’s, BetMGM, Wynn Interactive, Resorts World, and PointsBet, have been conditionally licensed and will be approved if they meet the state’s requirements.
“We are excited to finally be able to offer millions of passionate New York sports fans the top rated DraftKings mobile and online Sportsbook,” said Jason Robins, CEO, co-founder and chairman of DraftKings, in a statement.
The legalization of online sports betting in New York is a big deal. There are 32 states that have legalized sports betting in the U.S., but only 17 that have legalized mobile wagering. New York’s online sports betting market is expected to hit $1 billion in annual revenue, according to analysts at Macquarie. Annual tax revenue from online sports betting will hit $493 million by the beginning of 2025, the state estimates.
Former Gov. Andrew Cuomo legalized mobile sports betting in April 2021, but it’s been legal to place in-person bets at sportsbooks in the state for years. The nearest casino to New York City to wager on sports is a two hour-drive to Resorts World Catskills, which has led to most sports gamblers choosing to cross the Hudson River to New Jersey to place bets on their phones, which legalized mobile wagering in 2018. An estimated 20% of the sports betting action in New Jersey comes from New Yorkers crossing the state border, according to research by Macquarie.
While the New York sports betting market is exciting for gaming companies, the privilege to operate a legal mobile sportsbook in the Empire State comes with a high price. Sportsbooks will be taxed on 51% of gross gambling revenue, which is extremely high for the industry. The median online sports betting tax rate in the U.S. is around 11%, according to Macquarie, and the only other state with a 51% tax rate is New Hampshire. Sports betting platform providers awarded licenses by the Gaming Commission had to pay a $25 million one-time licensing fee. Still, thanks to a population of nearly 20 million, the state is a promising market for the industry.
The state is looking at mobile sports betting, and the legalization of adult-use cannabis, as new revenue streams. According to a review of the state’s budget by New York State Comptroller Thomas DiNapoli, online sports betting will bring in $99 million by the end of 2022. By 2025, the state expects legal mobile wagering to bring in $502 million in tax revenue. In the battle of the vices, pot loses to sports wagering. The state estimates that adult-use cannabis sales, which have yet to launch, will generate $115 million by 2023 and $245 million in 2025.