Online Sports Betting Is Live In New York
Online Sports Betting Is Live In New York
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Hey friends,
I hope each of you had a great weekend — let’s get right into it.
Mobile sports betting in New York officially went live this past weekend, and with roughly 20 million residents, they instantly became the largest online sports betting market in the United States.
Only four sportsbooks were active on day one—FanDuel, DraftKings, Caesars, and Rush Street Interactive—but the early numbers look impressive.
According to GeoComply, New York recorded 5.8 million geolocation transactions in its first twelve hours of operation — that’s more than double the previous record set by Pennslyvania (2.3M).
Geolocation Transaction Volume (First 12 hours)
New York: 5.8 million
Pennsylvania: 2.3 million
New Jersey: 2.1 million
Michigan: 1.6 million
Illinois: 1.1 million
Arizona: 1.0 million
These numbers shouldn’t be much of a surprise to anyone.
Sure, New York legalized in-person sports betting more than two years ago, but with the nearest location more than an hour outside of New York City, the state has collected less than $4 million in total tax revenue from the decision so far.
But here’s the wild part: New York might collect more than $5 million in tax revenue from online sports betting in the first weekend alone — here’s the math.
One login doesn’t automatically equal one bet, of course. Many people saw an advertisement, signed up to collect a bonus, and ditched the process once they realized the KYC requirements to continue.
Still, historical data tells us that the majority of people that sign up for a sports betting account end up placing more than one bet, and I think a $200 million opening weekend handle is probably a fair estimate.
But the more interesting part of this is where New York goes from here.
Sportsbooks know that the average person downloads less than two apps, so the early rush to acquire customers got heated. US-market share leader FanDuel offered a risk-free first bet up to $1,000. DraftKings gave away $50 if the Knicks scored a point against the Celtics, and Caesars gave $300 to anyone who signed up for an account.
Remember, New York has a 51% tax rate for operators, so the margins are already thin.
The state is expected to become the largest US sports betting market quickly. Their neighbor New Jersey got a headstart and now regularly does over $1 billion in monthly bets after becoming the first state to cross that threshold in October.
Industry estimates say about 20% of New Jersey’s handle is coming from New York residents crossing state lines to bet, so you should expect that to show in the data relatively soon, but I also think people are underestimating the number of weekday bets that New Jersey will lose because of this.
For example, if you are a New Jersey resident that works in New York City, you will probably end up placing a fair amount of bets throughout the week while traveling for work — this is all dependent on how many people go back to the office, of course.
My guess is that it will probably take a few months to draw an accurate conclusion of the data. But even if New York was to bring in $300 million to $500 million in annual tax revenue from online sports betting, that would still represent less than 1% of their annual budget.
We’ll see how it goes, but as always, I’ll keep you updated as things change.
Have a great day, and we’ll talk tomorrow.
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