As data continues to trickle out from New York’s inaugural weekend with legal mobile sports betting, all indications point to historic volumes in the state even with fewer than half of the chosen operators currently live.
Four operators — Caesars Entertainment, DraftKings, FanDuel and Rush Street Interactive — took their first online bets in the Empire State on Saturday after receiving the green light from the New York State Gaming Commission earlier in the week.
Five others, including BetMGM, Bally’s, PointsBet, Resorts World and WynnBET, have yet to receive clearance to launch from the commission.
Although many had high expectations for the most coveted U.S. market yet to launch betting to date, the volume of bets from data that has trickled out in the days that followed suggests a still staggering amount of betting in the early stages.
Lindsay Slader, managing director for geolocation provider GeoComply, said that the company saw 5.8m geolocation transactions in the first 12 hours of betting Saturday, and 17.2m transactions over the weekend in total.
“A launch this size is historically unprecedented, with volumes eclipsing the second closest ranked state, Pennsylvania, by (approximately) 2.5 times,” Slader wrote in a post on LinkedIn on Sunday.
In addition, of those 17.2m transactions, she said, more than 8m took place within the five boroughs of New York City, a figure that was larger than any standalone state in the U.S. over the same weekend.
A spokesman for Caesars said the amount of handle in New York from the sportsbook’s launch Saturday morning through the end of the NFL’s late window Sunday afternoon “nearly matched” the combined amount wagered in all 20 other states where Caesars offers sports betting.
“The numbers for us were massive,” added Caesars CEO Tom Reeg during an appearance on CNBC’s Squawk Box on Monday. “To put it into context, the last state we launched was Arizona, which was a four-day launch, and the volumes in New York were about nine times what Arizona was in a shorter period.”
Still, although the initial volume in New York is sparkling, at least one analyst is warning that the figures could be misleading in terms of the long-term health of the market, pointing out that although the four operators have offered bonuses that are comparable to other states in the early stages, that is ultimately unsustainable in a market with a 51 percent tax rate.
“The problem with high taxes and low incentives is with attracting VIPs to specific brands and ensuring that they bet big: high volumes are a problem if they are incentive-driven, which early data and market comparisons suggests they are,” wrote UK-based analyst firm Regulus Partners in a note to investors.
“However, the distortions to customer expenditure vs. betting volumes is quite hard to articulate at the policy level, and so as an additional trap New York is likely to see big volumes being presented as a sign of ‘success’ rather than a more nuanced direction of travel, in our view.
“Ironically, early aggressive bonusing to try to gain share will even drive ‘encouraging’ GGR and tax levels vs. underlying revenue trends, which is basically the industry digging a hole for itself faster,” the firm continued. “With nine brands currently or soon to be in action, there is just enough competition for the industry to engage in mutually assured destruction.”
Reeg agreed that the current promotional environment will not be a sustainable one in the long term.
“There’s no doubt that New York is an onerous tax rate, it will be less profitable than New Jersey on a margin basis,” he said. “And ultimately the promotional environment is going to be far less in a New York versus a New Jersey because of the difference in tax rate.
“If you’re able to move over the border, you’re likely going to get a better offer in New Jersey than you do in New York once you get out of this opening time frame,” Reeg said.