New York ended its first year of legal sports betting by setting an all-time annual handle record of $16.2 billion, smashing past the previous yearly high of $10.9 billion set by New Jersey in 2021.
The Empire State reported that the December handle came in at $1.62 billion, its highest monthly total since March and the tenth consecutive month in which the handle exceeded the $1 billion mark.
Additionally, New York saw its Gross Gaming Revenue (GGR) for 2022 come in at $1.36 billion, another all-time state record.
The news comes just as the Empire State marked its one-year anniversary on Sunday, having launched into the U.S. legal online sports wagering market on January 8, 2022.
Sports betting in New York also established another all-time state record by raking in $693 million in tax receipts on sportsbook revenue for the year — easily surpassing former Governor Andrew Cuomo's original forecast of $500 million.
This figure is even more impressive when taking into account that New York currently licenses only nine sportsbooks, compared to the 25 currently operating in the neighboring state of New Jersey.
This massive tax infusion into the state treasury is the direct consequence of New York's onerous sportsbook tax rate of 51%, easily surpassing the next highest state tax rate of 36% that Pennsylvania imposes on online sportsbooks and far higher than the average state sportsbook tax rate of 19%.
Although New York's $1.6 billion handle was the highest of any state that has thus far reported, sports betting revenue in December declined 4.3% to $142 million compared to November's record figure of $148.2 million.
FanDuel, DraftKings, and Caesars dominate the market
Consistent with their stranglehold on the U.S. legal sports betting industry, the Big Four online betting sites — FanDuel, DraftKings, BetMGM, and Caesars — captured an overwhelming 96% share of total New York GGR and 93.3% of total handle.
In this respect, the market dominance of the Big Four reflects the broader trend that has taken hold nationwide and has seen the major operators effectively relegate other sportsbooks to also-ran status.
FanDuel topped the list of leading sportsbooks in New York with Gross Gaming Revenue (GGR) of $650 million — representing a massive 48% share of total operator revenue — on a handle of $6.5 billion (40% share of total sportsbook handle).
The leading U.S. sportsbooks' runaway hegemony over the New York market was largely driven by its first-to-market introduction of in-play parlay betting that saw it attain an impressive 10% hold rate for the second half of 2022.
One of the most impressive aspects of FanDuel's market leadership in New York is that the operator's $650 million in revenue is equal to that of its next three sportsbook rivals combined.
DraftKings placed second with $354 million in GGR (26% market share) on $4.5 billion in handle (28% of total sportsbook handle), while Caesars came in third (improving on its usual placing in other major markets) with GGR of $215 million (16% of market share) on $2.8 billion in handle (17% share).
BetMGM, which usually comes in third in market share in most U.S. legal online sports betting states, finds itself sitting well back in fourth place with only $81 million in GGR (6% share) on a handle of $1.3 billion (8.3% share).
This result calls into question the niche operators' long-term viability under the current high-tax regime and ongoing cash burn related to customer retention and acquisition in the face of fierce competition from the major players.
New York set to launch iGaming and casinos
The record sports betting figures posted in 2023 put New York on track for further expansion in the gaming sector. There have been calls by several state legislators, including that by Sen. Joseph Addabbo, Jr. (D-15), Chairman of the New York State Senate Committee on Racing, Gaming, and Wagering, for New York to legalize online gaming in order to raise even more money for education and other state programs.
New York City is currently in the process of granting building permits to several operators intending to build casinos in its jurisdiction.
Proposed projects include hedge fund billionaire and New York Mets' owner Steve Cohen's idea for a casino on the parking lot of the team's Citi Field in Willets Point, Queens, a joint venture between Steve Ross's Related Companies and Wynn Resorts for a casino to be built in Hudson Yards, and a partnership between Caesars Entertainment, SL Green, and Jay-Z’s Roc Nation for a Times Square casino.