The New York State Gaming Commission granted licenses for online sports wagering, which could kick off in the Empire State by the Super Bowl.
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New York is going mobile — for sports betting.
The New York State Gaming Commission on Nov. 8 OK'd two groups of mobile sports betting operators for 10-year licenses. FanDuel Inc., DraftKings Inc., the online division of Bally's Corp. and BetMGM LLC comprise one. Approval was also granted to Rush Street Interactive Inc., Caesars Entertainment Inc., Wynn Interactive LLC, PointsBet Holdings Ltd. and Empire Resorts Inc., under the Resorts World moniker. The latter also includes Kambi Group PLC, which will provide sports betting technology.
The approval by regulators will make New York the most-populous U.S. state allowing online sports betting. Home to numerous professional sports teams, New York has estimated mobile betting will over time yield some $500 million in annual tax revenue from what is projected to be a $1 billion wagering market. In addition to licensing fees, the sports-betting companies' revenues would be taxed at a 51% clip, one of the highest among states where the practice is legal.
While processes must still be put in place, reports indicate that online sports wagering should commence before the Super Bowl on Feb. 13, 2022, perhaps during the NFL playoffs.
While operators' revenue will be taxed at a high rate in New York, online adoption in the fourth most-populous state marks a milestone for the legalized sports betting industry, which has been growing since the Supreme Court in May 2018 struck down a law that had limited the practice to Nevada. California and Texas do not have legislation allowing for sports betting, while it is legal but not yet operational in Florida.
The rollout of mobile sports betting in New York figures to eat into New Jersey's take of the pie, as research firm Eilers & Krejcik Gaming estimated that by crossing the Hudson River, New Yorkers accounted for 18.3% of sports betting in the Garden State in 2019.
New Jersey became the first state to eclipse the $1 billion sports betting mark this past September, handling a total $1.01 billion in such wagering, according to figures from the New Jersey Division of Gaming Enforcement. Online sports wagering accounted for the lion's share at $918.4 million.
Connecticut, which recently launched sports betting at casinos, online and now at select taverns and other retail outlets, will also feel the impact when mobile sports wagering starts in New York
From a media perspective, sportsbook operators in New Jersey have been running ads on local stations and regional sports networks with audiences that spill into New York. Recently, Caesars has been airing commercials pointing specifically to its app's newfound availability in Connecticut.
BIA Advisory Services forecasts that local TV stations could garner $445.3 million in ad spending this year before approaching $570.7 million in 2022 and $581.4 million in 2023. Those projected increases were dependent to some extent on New York allowing mobile sports wagering, said senior vice president and chief economist Mark Fratrik in a recent interview.
While mobile sports betting has yet to begin — New Yorkers have been able to make sports bets at select casinos — PointsBet cannot wait to start.
"Having the potential to secure market access to New York state — expected to be one of the largest and most important markets in the United States — represents another major milestone for our company, our brand, and our technology,” said PointsBet USA CEO Johnny Aiken in a statement. "We eagerly await the official opportunity to leverage our exclusive sports betting partnership with NBC Sports and introduce the nation’s premier sports betting product to the countless passionate, sports-loving New Yorkers.” NBCUniversal Media LLC holds a stake in PointsBet.
Among the companies that did not make the New York cut: Fanatics Inc., the sports-merchandise retailer that is looking to move into sports gambling, and Penn National Gaming Inc., which operates the Barstool Sports app.
During its third-quarter earnings call last week, Penn National CEO Jay Snowden expressed mixed feelings about New York, stating that in addition to the high license fee, the 51% tax is on gross pre-promo spend, not net. Snowden said he does not believe a single operator will make money in New York.
"I think it's going to be an EBITDA detractor," he said.