Despite the high numbers and glowing news coming out of New York since the debut of mobile sports betting on January 8, it seems that all might not be copacetic in the Empire State: according to one analyst, reported the New York Post, sportsbooks in New York have actually been losing money over the last two months.
One tally estimates that bookmakers have lost as much as $200m.
This may come as a surprise amid numbers which show New York to have had the largest mobile betting debut in American history - $2.4bn wagered in the first month and between 1.5 million and 2 million new accounts opened.
But the media blitz – both advertising and promotions – comes at a cost.
According to one breakdown, sportsbooks that are spending big on promotions are in fact spending up to $100-$150 per customer. This, unsurprisingly takes its toll on the bottom line.
Added to the damage is the tax regime. It is well known that operators are taxed at a rate of 51% of revenue. What’s less well known is that they are also taxed the same rate on the money they spend on promotions.
Illustrative of the challenges facing operators in New York is the industry behemoth, DraftKings. Despite having 25% of the state’s market, it still managed to lose nearly $50m in the first month of betting. Analysts at the company estimate that it could lose as much as $150m in the first year.
While it has been something of a losing month, industry mavens expect the numbers to pick up soon, once the media blitz dies down some.
