Since launching on January 8 of this year, legal sports betting in New York has proven to be a highly lucrative endeavor for the state and its gaming operators. Many, of course, expected them to hit the ground running. New York is one of the three biggest sports markets in the entire country. But few could have predicted that New York sports betting would turn into a billion-dollar industry less than 12 months into its grand opening.
Don't bother reading that again. You saw it correctly the first time. That's billion will a "b." And just to be clear, we're not just talking about the total amount of bets placed. "Gross Gaming Revenue" refers to the actual profits turned after accounting for payouts to winning wagers and promotional expenditures. That's why this announcement is so monumental.
What's more, New York sports betting revenue comes across as additionally absurd when looking at the monthly breakdowns and projections headed into next year. It may not be long before the state is turning a multi-billion dollar profit on an annual basis—particularly following the news that New York Governor Kathy Hochul wants to expand casino and iGaming throughout the entire region.
When Did New York Sports Betting Become a Billion-Dollar Industry?
Prior to the November elections, the state announced that they had surpassed $1.03 billion in gross gaming revenue. This news came down around October 22, which means it took New York sports betting just under 11 months to cross the $1 billion benchmark. And while many projected this market would eventually crack $1 billion, they weren't entirely sure it would happen during the first year of operations.
As Senator Joseph P. Addabbo Jr., one of the state’s biggest proponents of online sports betting, told Elite Sports NY: "That is an incredible achievement—especially in only a 10 month timespan with only 9 operators — with the majority of this money going towards the state’s educational coffers, gaming addiction programs, as well as youth sports programs.”
Indeed, experts throughout the sports betting industry thought New York would need to license more gaming operators before they could cannonball comfortably into $1 billion of net revenue. But these projections also rested on the assumption the state could suffer from abridged seasons for a number of pro sports leagues. The NFL, MLB, NBA and NHL all weren't quite sure they would be able to play out a full schedule as the entire country continued to grapple with the ongoing effects of the coronavirus pandemic.
In the end, many of the restrictions that impeded sports leagues—and life at large—were lifted by the end of 2021. That paved the way for all four North American sports leagues to resume business as usual or a model that was close to it. As a result, the NHL, MLB, NBA and NFL all played—or are currently playing through—full seasons during the 2022 calendar year. That availability ensured the state's residents would show maximum interest in New York sports betting and, thus, contributed to the $1 billion-plus in gross gaming revenue.
How Much Revenue Does the State of New York Make Off The $1 Billion Touchstone?
As many already know, not all of the gross gaming revenue goes to the state of New York alone. This $1 billion figure represents the profit totaled by all nine of the gaming operators. New York then taxes that amount at a certain percentage, which represents their own profit.
In most places, the tax rate on gross gaming revenue ranges somewhere between 10 percent and 25 percent. The average sports betting tax in the United States at this writing checks in at 19 percent, according to Morgan Stanley. But because New York is considered a premier sports betting market, they have the ability to assess higher charges.
Much higher charges, in fact.
For the duration of New York's current gaming compact, they will tax online sports betting operators at a 51 percent clip. And that means the state of New York generated an additional $531 million in tax revenue through the first 10 months of mobile sports betting.
But that's not at all. Using that $531 million figure as a baseline, New York is averaging $53.1 million in extra tax revenue per month. With two months left to go before the one year anniversary of legal online sports betting in New York, they could see the total number top $700 million. The end of December and beginning of January are among the busiest times of the year for sports betting thanks to college football bowl game betting and betting on the NFL playoffs. It wouldn't be a surprise if December, specifically, is a $100 million tax month for New York.
Is New York Still Leaving Sports Betting Revenue on the Table?
It sounds unbelievable, but New York sports betting is leaving money on the table. They have yet to embrace commercialized casinos in New York City or expand their iGaming operations to include online casinos. That in itself can be worth a boatload of money.
Though this may not be a turnoff for many sports bettors, it no doubt costs New York some business. Governor Hochul wouldn't be so focused on expanding the market otherwise. As it stands, New Yorkers can turn to New Jersey for more flexible iGaming options. They can also sign up with any one of the sites that appear in our reviews of the top online sportsbooks.
If and when New York embraces more flexible iGaming, the limit on their earning potential doesn't seem to exist. They might be able to sniff a $2 billion gross gaming revenue stream without making any changes whatsoever. A $3 to $4 billion gross gaming amount will not be out of the question if they incorporate more iGaming.
Take a look at this list of the top online sportsbooks so you can decide which one to use for all of your sports betting needs:
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