July 14, 2022
Sports Betting Guru
Sports Betting Guru
The laws that allowed legal sports betting to begin in New York State allowed for nine online operators to be licensed. After some delays, Bally Bet launched their online sportsbook, making them the last of the initial licensees to begin taking wagers.
Sports betting became legal in New York in January of 2022, with licenses awarded to nine operators via a competitive bidding process. Many of the winning operators were ready to go on day one, with the rest following in the subsequent months. Bally Bet won a license, but experienced delays as they built up to their own launch. They have finally joined the fray, entering a market that has quickly become one of the largest states in terms of overall handle. The state has generated nearly $9 billion in handle during their brief period of legalization, easily surpassing states that have had legal sports betting for years to rank fifth overall in lifetime sports betting handle.
The large size of the betting market has made the competing sportsbooks battle each other relentlessly in terms of advertising spend and promotional offers. As the market took hold, books offered a slew of lucrative promotions designed to entice new bettors and earn their loyalty. Bally Bet may have saved some money in the short term by staying out of the fight, but the ramifications of their tardiness could be felt in the long run as they are now in the position of entering an extremely competitive market where well-funded behemoths have established a strong foothold.
The recency of the launch indicates there are still plenty more new customers to be won, but FanDuel and DraftKings have used the first six months to capture a huge swath of New York sports bettors. The two companies have combined to take in more than half of the state’s overall handle, with FanDuel taking in more than $3.4 billion in handle and DraftKings cresting the $2 billion mark. The most recently launched book is also the one that has taken in the least amount in wagers, having handled just $24.6 million.
It may still take some time for New York State’s lifetime handle to surpass states that have had legal sports betting for significantly longer, but the state’s 51% tax rate combined with the rush of wagering has already made them the nation’s leader in tax revenue generated. Caesars Sportsbook has been another very successful entry into the New York legal sports betting market, but even they opted to pull back on promotional offers and advertising expenditures.
The highly competitive market combined with the significant tax burden makes operating as a sports betting provider in New York no easy task. They will have to perform well on multiple fronts to acquire a sustainable share of the market while maintaining profitability in spite of more than half their revenue going to taxes. The company has repeatedly stated that they are not dismayed by the delayed launch, and has a long term plan that involves a conservative marketing spend in the face of the high tax rate. CEO Larry Fenton assured investors that the company was taking all factors into consideration and is prepared to take on the challenge, saying ”In New York, we will be cautious as we keep a keen eye on marketing spend and how to navigate a high tax environment in sports betting,”
There is never a downside for sports bettors when it comes to having more choices of where to place their wagers. Bettors should not expect to see the enormous promotional offers that were being thrown around in the initial days of legal New York sports betting, but even something as simple as a small odds fluctuation can provide value for the savvy sports fan. As the market continues to mature, there will be plenty more new customers to come as well as novice bettors who expand their options to include multiple books as they gain more experience with the hobby.