Would More Operators Mean Better Business in New York Sports Betting?

Would More Operators Mean Better Business in New York Sports Betting?
Fact Checked by Pat McLoone

Online wagering is still in its earliest stages in the Empire State, having just launched in January, but the initial financial figures tell a compelling story that might be predictive about New York sports betting’s future.

The facts are stark.

There are currently eight online sports betting operators in New York, but just four of them are controlling about 95% of the market in the first two months.

The online sports betting handle in New York, from launch on Jan. 8 through March 13, was just shy of $4 billion at about $3.93 billion.

The four leading operators — FanDuel New York, DraftKings New York, Caesars Sportsbook New York and Bet MGM New York — have accounted for about $3.76 billion of that total.

Must be 21+ to participate & present in NY. Gambling problem? Call (877-8-HOPENY) or text HOPENY (467369). Visit BetMGM.com for Terms & Conditions. US promotional offers not available in NY, NV, or Puerto Rico.

Introducing New York Betting's Big Four

Even among the Big Four, there is separation: FanDuel, CaesarsSportsbook New York and DraftKings accounted for 85% of the market in the first two-and-a-half months. BetMGM, which started a week after the others, had about 8%.

Considering those four are already looked upon as the most muscled-up online sportsbooks in the country, it’s hard to see challengers making a run at them in New York.

With the New York market still evolving, some state legislators are talking about increasing the number of licenses available. So far, eight sportsbook operators are in play. The rest of the current field includes PointsBet New York, BetRivers New York, WynnBet New York and Resorts World New York. Bally Bet New York is also a licensed operator in New York but has stayed clear of the marketplace battle to date.

The total number of operators is important because the state’s sports betting regulations set the tax rate at 51%, as long as the operators max out at nine. If the state allows more operators, the tax rate would slide to 50% (for 10-12 operators) and then down to 35% once the operator total hits 13.

With four operators already dominating, even a one-point reduction in the tax rate across the board could be a net loser for the state if it does allow more operators. The reality is that increasing gambling supply with more sportsbooks doesn’t necessarily increase gambler demand.

A sobering reality on the operators’ side is the cost of competing for business in New York (on top of a huge tax rate) might prove to be so expensive in terms of promotional bonuses to customers and in advertising costs that the bottom line in the first financial quarters of operation in the state very well could result in bottom-line red ink.

For an industry sector that is already being pummeled on Wall Street by disillusioned investors getting impatient with the unfulfilled promise of online sports wagering producing big profits, the prospect of the much-anticipated launch of online sports betting in New York adding to net losses could turn off investors even more.

What Does the Future Look Like?

There has been a sense that ultimately the crowded sports wagering universe in America will have to be winnowed. For a while, the trend for the industry sector was taking companies public, such as DraftKings and Rush Street Interactive hitting the Nasdaq through special purpose acquisition companies (SPACs). For a while, FanDuel’s parent, London Exchange-traded Flutter Entertainment, discussed spinning off FanDuel as a publicly-traded company in the U.S.

All that has cooled off. Instead, major gaming companies are actually pulling back from online sports wagering – Wynn Resorts, Sands Las Vegas and Churchill Downs, for instance.

And, so, talk of consolidation is in the air.

Usually, consolidation is achieved through mergers and acquisitions. However, as the early example in New York shows, with just four sportsbooks able to grab significant shares of handle, it very well could be that the marketplace will sort the online sports wagering competitors and do its own consolidating.

Must be 21+ to participate & present in NY. Gambling problem? Call (877-8-HOPENY) or text HOPENY (467369). Visit BetMGM.com for Terms & Conditions. US promotional offers not available in NY, NV, or Puerto Rico.
Must be 21+ to participate. T&Cs apply.


Bill Ordine was a reporter and editor in news and sports for the Philadelphia Inquirer and Baltimore Sun for 25 years, and was a lead reporter on a team that was a finalist for the Pulitzer Prize in Breaking News. Bill started reporting on casinos and gaming shortly after Atlantic City’s first gambling halls opened and wrote a syndicated column on travel to casino destinations for 10 years. He covered the World Series of Poker for a decade and his articles on gaming have appeared in many major U.S. newspapers, such as the Los Angeles Times, Chicago Tribune, Miami Herald and others.

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