Why New York Holds the Key to the Rise of the US Online Gambling Market
It may only be November, though for some Big Apple residents the festive season has come early. While it might not quite be a ‘Fairytale of New York’, for the state’s newly approved online gambling companies; a place where they have cars big as bars and rivers of gold, it could be deemed a Christmas miracle.
Of course iconic songwriter and self-proclaimed New York enthusiast, Shane MacGowan had no involvement, though those select few will no doubt be confident of striking the right notes, hopefully without scrutiny from theboys in the NYPD choir.
Months of speculation and a tense wait has reached a conclusion; New York state having been granted approval to offer mobile sports betting to residents, in a move that can unlock what could become the biggest market in the US.
Currently, neighbouring New Jersey holds that accolade. The Gaming Commission has awarded rights to nine mega-firms in the industry to offer their services after bids were unanimously accepted.
The minimum requirement set under state guidelines was for four operators and two platform providers. Spoiled for choice, enthusiasts can choose from more. US behemoths DraftKings Inc., MGM Resorts International’s BetMGM joint-venture with Entain, Bally’s Corp. and FanDuel; a brand of Flutter Entertainment PL joined forces to win one of the bids.
Meanwhile, the second group contained Caesars Entertainment Inc., Wynn Resorts Ltd., PoinsBet Holdings Ltd., Rush Street Interactive and Malaysia's Genting-owned subsidiary, Resorts World, led by technology supplier Kambi Group Plc. For the Big Apple, the online gambling industry could well bear fruit after all.
Backdrop to many a movie and home to the fabled Broadway Theater District, New York’s online gambling market has the potential to have a similar effect on the state’s economic fortunes and this latest reveal indicates who the key protagonists will be. While the first act is yet to really get going, the stage is set to provide a show of box office proportions.
With the backing of New York State Democratic Senator, Joseph Addabbo Jr. - chair of the racing, gaming and wagering committee, prior to the news officially being broken, his brief soundbite carried all of the weight of a Tony Award - impactful and dramatic.
“This is big”, he asserted. “Once we enter the arena, we’ll eclipse New Jersey”.
Goldmine in the waiting
As far as the state is concerned, this latest legislation is effectively a license to print money. Operators are required to pay a staggering 51 percent tax rate per year over a decade, with early estimates indicating that New York could be making almost $500 million in revenue from online bets by 2025.
Envious glances from bordering states might be forgiven - as far as the market is concerned, this is a sleeping giant, ironically, with the ‘city that never sleeps’ now further primed to hold even the heaviest of eyelids.
Being granted access to every sporting competition in the world via a number of operators to boot, eager customers will no longer have to make the commute to New Jersey just to bet online as has been the case over the last year. It is estimated that20 percent of all revenue is from New Yorkers (that equates to $200 million for September), crossing state lines just to place a bet on their phone; a two hour commute by all accounts.
Playing home to Wall Street - arguably the world’s finance capital, it could be said that the state already has an advantage over others in the market, especially when considering a potential target customer. In a profession where gambling is the order of the day, don’t be surprised to see high volumes of bets from traders, brokers, analysts and hedge fund managers that can overnight make this one of the most lucrative markets in the industry.
While New Jersey currently generates hundreds of millions in revenue per month from gambling, its neighbour can very quickly catch up in what could be the most intriguing arms race for sports betting operators for years as they fight for market share.
All eyes on the Super Bowl
It is anticipated that online sports betting will go live just before the Super Bowl - an event that is one of the biggest magnets in US sport for the market. It was predicted that the 2021 event was expected to generate $4.3 billion in revenue alone, with estimates likely to eclipse this figure for 2022.
At the time, Matt King, CEO of FanDuel touched on how legalisation of online gambling across the US makes for a promising outlook for the industry: “I think it’s a testament to and further evidence to how pervasive sports betting has always been in our society,” he said.
“Part of the reason you’re seeing the legal market grow so much is as states legalize, we are taking market share from the illegal markets.”
Already, the state of Michigan has witnessed records broken month by month, after only legalising online gambling in January. With the start of the new NFL, NBA and NHL seasons, revenue figures for online sports betting in the state soared significantly to just under $400 million for September.
Despite the fact that New Yorkers will miss out on the opportunity to make bets on the NFL this season, should online sports betting go live in the state in time for the Super Bowl, the revenue figures could very well exceed all expectations.
The sportsbooks that are available will likely offer multiple new customer offers - some even specific to the Super Bowl, with boosted odds for a wide range of markets in order to attract as many bettors as possible. Because they will be competing for as large a share as possible, the sheer variety and choice that bettors are going to have makes this a highly fascinating prospect.
Sportsbooks also know that they cannot afford to get this wrong. The potential lifetime value (LTV) of a high percentage of New Yorkers is substantial and each operator will be keen to make sure that their customers' experiences are as smooth as possible. There literally is no margin for error.
Multiple sports franchises make New York a magnet
Across the NFL, NHL, MLB, NBA and MLS, the state currently boasts seven different sports franchises and as a result, fans will be well catered for should they wish to place bets on their teams.
Sports franchises in the state are some of the most well-known in the US, especially the New York Yankees which provides a substantial draw towards betting on the MLB; don’t be surprised to see a link-up between a betting operator and the Yankees in the not too distant future.
Then you have to factor in corporate entertainment. Many of these franchises already have commercial link-ups between what is likely to be markets that sports betting operators will target, such as investment banks, law firms and even tech companies, which provides even more of an opportunity for operators to capitalise.
Is New York the catalyst?
While it has been predicted that the US could become the biggest online gambling market in the world over the next few years, it may well be New York that helps to make this possible - particularly when considering the potential.
Eyes of course will be on other states in the short term that can all make a contribution, however, after a long wait New York may be the one which banks the kessef.
However the next few months unfold, there will no doubt be plenty of New York residents who will be hoping to say that they got on a lucky one, that came in eighteen to one.