As New York legalizes sports betting, insiders wager on deluge of betting
New York became the 18th state to legalize online sports betting, but it's a whale of a player because of its 20 million-plus residents, making industry insiders believe the Empire State will set a new record for the highest amount of sports wagering in the first two months of business.
The state's gaming commission gave four companies — Caesars Sportsbook, DraftKings, FanDuel and Rush Street Interactive — the OK to start accepting bets from smartphone apps on January 8, with more companies expected to get a green light before Super Bowl TKVII bets kicks off February 13. It will take several weeks before New York reports its handles for January and February, but those closely following the sports gambling industry believe the figures will surpass the current record of $777 million held by Arizona.
"I suspect that New York will surpass all states in their debuts," Andrew Sneyd, FanDuel's senior vice president of brand marketing, told CBS MoneyWatch. "It'll be a very successful first couple of months for New York."
In sports betting, a "handle" refers to the total amount of money wagered by bettors.
Arizona opened its legal sports betting activity last fall. In September and October, the most recent data available, the state reported a combined $777 million handle, setting the U.S. record, the Arizona Republic reported.
New York will almost certainly eclipse $777 million, said Daniel Wallach, a sports wagering lawyer in New York. That's because New York has the largest population of any state with legalized sports gambling and gave the OK at arguably the most active time of year for betting, Wallach said.
A city full of sports fans
Millions of sports fans have already placed bets in New York on January's college football championship and the NFL's Super Bowl and NCAA March Madness are right around the corner, Wallach added.
"It represents the holy grail of online sports betting in that this is truly one of the mega markets for it," he said.
New York also is one of the few U.S. states with multiple teams across all four major sports where bettors can wager. The state has diehard fans of the Liberty, Rangers, Islanders, Nets, Knicks, Jets, Giants, Bills, Mets and Yankees — a recipe for billions of dollars in bets every month, experts said.
In-person sports betting has been legal in New York since 2013, but adding the online component is a big deal for many reasons. First, millions of New Yorkers who would have otherwise placed illegal bets can now gamble without breaking the law, said Casey Clark, a senior vice president at the American Gaming Association. Another reason: Lawmakers in California and Texas — two large-population states that could rival New York's volume — will now feel pressure to legalize online sports betting, Wallach predicted.
"It's not a stretch for a state like California to eventually become legalized and pull down $30 billion in handles every year," said Wallach, who also teaches sports wagering law at the University of New Hampshire.
States began legalizing online sports betting three years ago after a U.S. Supreme Court ruling from 2018 struck down a federal law barring gambling on football, basketball, baseball and other sports. States where sports betting is legal have reported millions of dollars in added tax revenue, according to gaming association data. As of January, 18 states have legalized online sports betting — including Michigan, Nevada and New Jersey.
New Jersey losing out on bets
New Jersey has become the nation's top sports betting market. Through the end of November, New Jersey's nine casinos and three horse tracks that take sports bets have taken nearly $10 billion in wagers, including online wagers. Industry experts have estimated as much as 25% to 30% of sports bets in New Jersey are placed by New York residents.
Most New Yorkers will probably stay home now and place bets, Wallach said, meaning that New Jersey's sports handle could fall as much as 20%. Sneyd from FanDuel said he believes New Jersey could still see betting volume rise even though New Yorkers will likely bet from home.
FanDuel, DraftKings and other online betting platforms have become some of the biggest winners in the sports-betting explosion. DraftKings generated $614 million in revenue in 2020 and expects to cash in a cool $1 billion this year. FanDuel's parent company Flutter Entertainment said its 2020 betting revenue was $896 million, an 81% spike from 2019.
Sports leagues are also capitalizing on the sports betting explosion by selling official team data to betting companies. The NBA, for example, has a six-year contract with sports data and technology company Sportradar that is reportedly worth more than $250 million. Such contracts could easily swell to billions once more states legalize sports gambling.
The Associated Press contributed to this report.