Sports Gambling Revenue Dips, Stalling A Late-Summer Recovery

New York sports betting volume takes a surprising weekly dip, prompting questions
Facebook
Twitter
LinkedIn
Email

The legal sports betting industry in New York took a step back last week just as it appeared to be recovering from a summer slowdown.

The weekly handle reported by all nine operators in the state for the week ending Sept. 18 came to $296.7 million, down 10% from the previous week, according to the latest gaming commission report. The week ending Sept. 11 had produced the first handle over $300 million since early May. July and August produced the state’s only sub-$1 million monthly handles since the state launched legal sports betting on Jan. 8.

The weekly dip caused some who work with the sportsbook operators to once again raise the issue of the state’s 51% tax rate on gross gaming revenues (GGR), tied with New Hampshire for the highest in the nation. The tweet below came from Jeremy Kudon, a lawyer who has lobbied for DraftKings, FanDuel, and BetMGM, three of New York’s licensed operators:

Kudon later corrected himself in the thread, pointing out that the previous week had produced $330 million, not $431.7 million in sports bets. The GGR for the week ending Sept. 18 was $39.8 million, representing an unusually high hold rate, or loss rate for gamblers, of 13.4%, nearly twice a typical hold rate nationwide.

Overall trend remains unclear

It remains to be seen whether the latest weekly report represents the start of a sustained dip or was just a weekly anomaly, perhaps prompted by operators canceling some of the sign-up bonuses they offered heading into the NFL and NCAA football seasons. High inflation also could be contributing toward lower sports betting volume.

NY Online Gambling analyst Chris Altruda estimated that September and October could bring NFL-only handle exceeding $1 billion for the two months combined. The sportsbooks’ overall handle in the fall months thus could be in line with or even exceed the monthly numbers during the heyday of New York sports betting last January. The weekly high-water mark for handle was Jan. 23, when New Yorkers risked $572.6 million in sports bets.

Overall, the late-summer rebound appears to be real even after the latest setback. After six straight weeks of sub-$200 million tallies, New Yorkers have wagered at least $200 million in four of the past six weeks. July’s total handle of $800 million will almost certainly prove to be the low mark for 2022 New York sports betting.

The tax rate would automatically come down if state legislators were to approve an increase in the number of licensed operators by a substantial number. For example, four more operators would lower the tax rate to 36%. Previous New York Gov. Andrew Cuomo fought to limit the number of operators in the state against the wishes of some legislators.

State Assemblyman J. Gary Pretlow introduced a bill to license more operators in March, but it didn’t make the state budget for the current fiscal year. He and Sen. Joe Addabbo have continued to support the idea of adding more operators to bring down the tax rate.

Yearly numbers remain impressive

All told, New Yorkers have bet $10.99 billion on sports since the state launched regulated gambling on Jan. 8, with the nine sportsbook operators hauling in $866.3 million in GGR, translating to a hold rate of 7.9%.

In July, Gov. Kathy Hochul’s office projected $357 million in tax revenue for fiscal year 2023, which began April 1, an estimate that could prove extremely low. New York sportsbooks have had to fork over $139.3 million in taxes since the week that started March 28, and there are seven months left in the fiscal year, including 15 more weeks of NFL regular-season games.

Three operators have seized about 80% of New York’s market share, with FanDuel (35%), DraftKings (25%), and Caesars Sportsbook (20%) dominating wagering activity in the state.

Photo: Shutterstock

Facebook
Twitter
Email

Related Posts