Online sports betting legalization in NY
Nine online sports betting operators were on November 8 issued licenses by the betting regulators in New York state. The process of choosing and settling down for the nine operators was a complex one
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that was closely watched. All this is thanks to New York being among the most prominent mobile betting markets in the USA. The criteria for choosing the nine operators was through two applications where the companies were merged into two super applications, with one having four operators and the other having five.
This called for a strategy to ensure that the companies were more likely to be selected. Each selected operator is required by law to pay a 51% tax rate over and above the $25 million necessary fees to acquire a sports betting license in the jurisdiction. All indications indicate that the operators may commence live operations before the 2022 Super Bowl.
State of online gambling in the US
Online sports betting legalization is a historic move for New York state. This is because only 18 out of the 32 states have legalized sports betting that have also fully legalized mobile wagering. Overall predictions indicate that the state's annual revenue generated from online sports betting could go to upwards of $1 billion, as noted in the Macquarie Group Ltd. The state also estimates that come 2025, it will collect tax revenue of upwards of $493 million from the online sports betting market.
The legalization of mobile sports betting dates back to April 2021 after approval by the then governor Andrew Cuomo. Before this, placing in-person bets on sports was entirely legal in New York for years, and players could place bets on some of the best online sportsbooks. The problem, however, was the closest establishment near New York that you could gamble in was the Resorts World Catskills. Note that the casino is a two-hour drive away from New York.
Most gamblers chose to go into the neighbouring New Jersey, crossing the Hudson River as this was tiring. Here it was easy to place wagers on their phones as the state in 2018 legalized all online sports betting activities. Interestingly, over 20% of all sports betting activities in New Jersey are connected to bettors from New York.
On 8th, The New York State Gaming Commission gave out 10-year licenses for the nine approved online sports betting operators. The nine were subdivided into two applications. One hosted Caesars Sportsbook, Wynn Interactive, Rush Streets Interactive, Points Bet, and Resorts World. This was referred to as the Kambi Group. The other application hosted Draft Kings, Bally's, and BetMGM under the FanDuel application group.
Costs associated with operating a casino
The truth is operating an online sports betting company in New York is a costly venture. Some of the costs of running a sportsbook in the jurisdiction include a 51% tax rate applied over the overall gambling revenue, which is among the highest globally. The average tax rate for several online sports betting ventures in all states in the USA is approximately 11% of the overall collected gambling revenue. New York and New Hampshire are the exceptions.
The nine selected online sports betting operators in New York will also be required to pay a one-time licensing fee of $25 million to the New York State Gaming Commission. Realistically speaking, the numbers may seem so high but considering recent statistics of a population size of approximately 20 million people, then it is a viable venture.
Though all the nine online sports betting sportsbooks have been vetted and approved, there is still no set time when online sports betting will be fully operational in the state. This is due to many factors, including printing in the state register, a primary requirement to operate in the jurisdiction. There is also a legal requirement where all online sports betting servers are physically located in one of the state's commercial casinos that offer in-person sports wagering. They include Del Lago Resort & Casino in Seneca County, Tioga Downs in Tioga County, Rivers Casino in Schenectady County, and Resorts World Catskills in Sullivan County. It is also important to note that the nine approved sportsbook operators in New York are also required to pay an annual fee of $5 million to the land-based casino housing its servers.
As earlier said, 32 states in the USA have legalized sports betting markets. However, illegal sports betting continues to be a big menace all over the states. Going by the findings of the national survey of bettors in the USA, the legalization of online betting in New York will ensure that the state receives $1 billion in revenue, which would otherwise be spent on the illegal betting platforms.
All projections point out that online sports betting may be a reality in the early months of 2022, with the deadline for going live being set at February 13, 2022. All the operators are anticipating the launch of operations to make New York the largest online sports betting market in the USA.