Sports betting operators in New York reportedly have yet to turn a profit, despite record betting activity since online betting opened on Jan. 8.
New Yorkers have placed more than $2 billion in bets — and more than 2 million player accounts have been used since the frenzy began.
Record numbers aside, operators may have lost a total of $200 million, one analyst told the New York Post.
- The operators have reportedly spent majorly on advertising, which costs between $100 and $150 per person. Caesars, for example, offered a $300 sign-up bonus and a promotion where the company would match up to $3,000 on deposits.
- The large tax rate in New York — which solicits 51% in gross revenue — has also contributed to the sports betting operators’ reported shortfall.
DraftKings has lost about $50 million, according to the analyst, but the company’s CEO said they expect “profitability” in two-to-three years.
Caesars also reportedly suffered losses, the analyst suggested. But the company’s stock jumped during after-hours trading following an announcement that it would scale back on promotional spending.
Beginning of NY Betting
Operating in New York will likely become less costly in the future, perhaps when initial advertising abates.
But while operators are struggling to profit, the state of New York has benefited greatly from the legalization of sports betting. It’s earned more than $80 million in tax dollars.
