We have arrived. The most wagered-on event in sports betting. The Super Bowl.
The Buffalo Bills failed to reach the big game, but Super Bowl LV will no doubt attract plenty of attention in New York. How could it not? Tom Brady and the Tampa Bay Buccaneers — the first team to play for the Lombardi Trophy in its home stadium — against Patrick Mahomes and the Kansas City Chiefs.
While Super Bowl betting will spike in jurisdictions that have legalized wagering, New York sports betting will miss out on hundreds of thousands of dollars in tax revenue because it lacks regulated online sports betting. Super Bowl betting in NY will only take place in retail sportsbooks.
What could have been if New York had legal online sports betting
There’s no doubt about the demand for online sports betting in NY. A recent estimate puts the value of mobile betting handle at $20 billion annually in the Empire State. Earlier figures suggested that New Yorkers crossed the state line to make legal wagers in New Jersey to the tune of $837 million in 2019.
A state-commissioned study indicated that mobile wagering in New York could lead to $1.1 billion in annual gross gaming revenue in three to five years. The study, done by the Spectrum Gaming Group, also noted that the state could pocket more than $100 million each year in state revenue.
That $837 million figure from 2019 doesn’t count the number of New Yorkers crossing another border, into Pennsylvania, to wager online. This year, NY residents will no doubt contribute toward Super Bowl handle estimates of $75 million in New Jersey and $55 million in Pennsylvania.
The Super Bowl is the single biggest betting day of the year for US sportsbooks. So what would New Yorkers wager online this year if they had the option to do so legally? It’s important to remember three things in forming a guess here:
- Not all online bettors instantly gravitate to legal books when they become available.
- It’s possible that legal betting apps in New York could pull traffic from residents of neighboring Connecticut, Massachusetts and Vermont.
- In this hypothetical situation, online wagering would be legal statewide, so more than just the population of New York City counts.
With those things in mind, assume handle in New York (in its first year) could compete with that of nearby New Jersey. The state is populous, has a robust sports presence, and the population is familiar with the concept of legal gambling. Those things lend well toward a strong performance.
How much tax revenue could Super Bowl online sports betting produce?
Let’s take the hypothetical scenario of NY legalizing online sports betting in 2020. Had the state done so, a conservative figure for Super Bowl handle in New York this year would be $70 million. It’s likely that the event could be worth more when the market hits maturity, as Spectrum projected. But in this example, bettors would be placing legal Super Bowl bets online in New York for the first time.
Another thing that’s necessary to quantify is a hypothetical hold. Sportsbooks don’t always clean up on Super Bowl wagers. As a matter of fact, legal books in both New Jersey and Pennsylvania have yet to record a Super Bowl Sunday in which they won.
For the sake of this example, assume the books collectively held 5%. Furthermore, assume the state lands on a tax rate of 10% for aggregate revenue and doesn’t allow operators to comp their promotional credits.
Those operators would hold an estimated $3.5 million (5% of $70 million). Taxed at that rate, that would mean $350,000 in revenue for the state. That’s not enough to solve the state’s current budget deficit. However, it’s quite a windfall from just one game.
Instead, this year, all that handle will go to legal books in New Jersey and Pennsylvania. Or even to offshore websites. New York could be close to correcting that issue, on some level. To what degree that happens depends on whether New York online betting is a state-run monopoly like Gov. Andrew Cuomo wants or a competitive market.
Will Cuomo’s plan handcuff Super Bowl online betting potential?
If Cuomo gets his way, Super Bowl handle might be a shadow of its potential. If the state enacts a broader framework, however, there’s cause for optimism. A single-operator system can not only lead to short odds but also a lack of promotional offers to draw bettors to the regulated market.
As a result, a lot of New York bettors could stick with their offshore channels or keep crossing state lines because they can get a better deal. Less handle means fewer tax dollars for the Empire State. On the other hand, a more open system could help out a lot.
The latest proposal out of the legislature in Albany would tether online wagering to the state’s commercial and tribal casinos. Such a proposal would give each property and tribe an extra skin to delve out. That could mean as many as 14 online sportsbook options in the state.
It would also bring some of the nation’s strongest brands into the market. BetRivers, DraftKings, FanDuel and William Hill have all already negotiated access with casinos. The extra skins would also give other books like BetMGM and PointsBet a path into New York.
So far, legislators seem determined to push through their version instead of Cuomo’s. Assemblyman Gary Pretlow, who chairs the Racing, Gaming, and Wagering Committee, called Cuomo’s plan “nonsense.” There’s always a risk that Cuomo could veto any bill that strays too far from his preferred route, however, and there may not be enough votes in the legislature to override that.
While leaders in Albany work out the details, the state treasury sits bereft of the potential hundreds of thousands of dollars that online sports betting on this year’s Super Bowl could have wrought. If a stalemate develops, the same may go for 2022 and beyond.