Licensed Online Sports Betting Launches in New York: $10B Per Year?

Online sports gambling is still slowly but surely rolling out across the United States of America. Ever since the Supreme Court overturned the PASPA law in 2018, more and more states have been introducing their own laws and regulations surrounding sports betting, including The Cornhusker State of Nebraska, The Hawkeye State of Iowa, and The Hoosier State of Indiana. The latest state to launch legalized online sports betting is thought to be one of the largest betting markets across the country.

New York officially launched its online sports betting scene on Saturday, Jan. 8, 2022. Four sportsbooks had already received approval from the New York State Gaming Commission to open their doors to bettors in The Empire State. This makes it at least the 18th state in the U.S. to permit residents to participate in online sports gambling in some way. With the NY launch, bettors have the opportunity to place wagers for the final week of regular NFL season games. Most certainly, they will also get the chance to bet on the playoffs and the Super Bowl, set for Sunday, Feb. 13.

Details of the Launch of Online Sports Betting in NY

An announcement was made by the Gaming Commission of New York State on Thursday, Jan. 6, which noted the four sportsbooks with permission to launch on the 8th. These were:

• Caesars
• DraftKings
• FanDuel
• BetRivers

Once 9 a.m. arrived on Saturday, the mobile betting apps providing the sports betting service for those operators were active and taking wagers. This saw New York join its neighboring states of New Jersey, Connecticut, and Pennsylvania in allowing its residents to engage in sports betting of some kind over the internet.

Caesars went as far as releasing its own television advertisement prior to the launch to inform New Yorkers of its ability to offer the sports betting service. Speaking of the impending launch, Jason Robins, who is the CEO, co-founder, and chairman of DraftKings, said:

We are excited to finally be able to offer millions of passionate New York sports fans the top rated DraftKings mobile and online Sportsbook.

It is thought that by 2025 the state will witness around $10 billion in sports betting wagers every year. At the same time, it is expected that almost $1 billion will be generated in profits, and they will be split up between the state itself and the operators providing the service.

As things stand at the moment, The Empire State has received $200 million in license fees from those operators wanting to provide sports betting within. At the same time, those companies have agreed to the terms of paying a 51% tax on their gross revenues. That’s quite the extreme amount when compared with the tax level in place in most other states offering legal sports betting.

Yet the operators have had time to consider their options. New York lawmakers managed to carve out a path towards legal mobile sports betting last April, when Andrew Cuomo was serving as Governor. It was included in the state’s $212 million spending budget, and the tax rate for operators was visibly noticeable within the text.

New York’s Reason for Allowing Sports Betting, and the Distribution of Revenue

Back when the Supreme Court cancelled out the PASPA legislation, lobbyists in New York had been campaigning for sports betting to be permitted in The Empire State. Eventually, mobile sports betting was included in that campaign.

Prior to this, New York allowed the casinos, both commercial and native-run, to start taking sports bets at their physical locations in 2019. But the reason that policymakers in New York were eager to set up mobile sports betting alongside this is quite simple – the money it will generate. That 51% tax rate on gross revenue will likely bring a tidal wave of money into the state coffers. According to some estimates, once mobile betting has been fully implemented in New York, around $480 million in taxes will be bolstering the state's funds annually.

Under New York State law, around 80% of the revenue has been earmarked for two specific purposes. Elementary and secondary education will receive a chunk while property tax relief will also get its own influx of money.

Two other purposes were also highlighted, with the first year seeing 1% of the revenue being reserved for problem gambling and education regarding addiction. This will level out at $6 million per year for subsequent years. And a further 1% will be divvied out in state grants for sports programs aimed at underserved youths. This will even out at $5 million a year in proceeding years.

New York Making Things Legal Despite Gambling Ban

Despite introducing and launching sports betting, both online and offline, it may seem quite odd that New York has a constitutional gambling ban in place. This is due to the fact that the ban has a few exemptions, including the state lottery, for horse racing purposes, and, as is quite crucial in this instance, for up to seven land-based casinos.

While those exemptions do not specifically allow mobile sports betting, it is in this area that Cuomo and his lawmakers managed to get a little bit creative. Servers for the mobile betting platforms available within New York will be located within one of the state’s private casino establishments. Four of these are up and running, and the mobile bets are therefore routed through the casinos. In this respect, Cuomo and co. were able to argue the case that mobile betting is officially allowed under the state constitution.

Former Governor Cuomo Was Instrumental in the Push for Mobile Sports Betting

Once the legislation was ready to be enacted, the introduction of online sports betting was pretty much a given. And it was this that even led to various offshore companies pulling out of the New York gambling scene. A big name in the shape of Bovada took the decision to no longer provide their gambling services, including sports betting, to New Yorkers. Brands like Slots.lv, Ignition Casino, and Cafe Casino, which serve under the same umbrella group as Bovada, also abandoned the New York market despite dealing with casino games and poker rather than sports betting.

As well as the four sportsbooks that launched on Saturday, five others are awaiting their final approval to begin providing sports betting services. They are:

• BallyBet
• BetMGM
• Wynn Interactive
• Resorts World Bet
• PointsBet

Critics Worry About Impact of Online Sports Betting

Even though money has been put aside to try and assist those with gambling problems, some critics were hesitant to embrace the online sports betting scene. Speaking their opinion, these anti-gambling activists warned of gambling addiction and its ability to destroy lives.

To try and alleviate such concerns, DraftKings made a point of highlighting its intent to conduct thorough background checks on those registering for online sports betting and wanting to make large wagers. This, it said, will be done to ensure that the gamblers are not betting money above their means.

One thing is for sure – New Yorkers will no longer have to cross state lines into New Jersey, Pennsylvania, or New England to engage in online sports betting activity. Instead, they were encouraged by State Senator Joseph Addabbo to try the New York product and then stick with it. Addabbo commented in an interview with ESPN:

New Yorkers are so savvy when it comes to sports that if we don’t have a competitive [sports betting] product that rivals and competes with New Jersey, Pennsylvania or even the illegal market, in a millisecond, they’ll go back to what they were doing.

Offshore Sportsbooks Still Provide Alternatives

While it is great that New York now has what is likely to be a burgeoning regulated sports betting scene, both online and offline, there are still various offshore sports betting sites in operation. These represent an alternative for New Yorkers to get involved in, and you can view some of the best offshore sportsbooks for U.S. players at ProfessionalRakeback too.

Through that guide, you can peruse information about some of the best offshore platforms. They include the sports betting options provided by the Sportsbetting.ag site, BetOnline brand, and various others.