New York March Madness betting is projected to generate $19 million in state tax revenue from NCAA basketball alone. That comes from a projected NCAA basketball handle of $560 million, which based on other markets, could make up a quarter of New York’s total betting handle.
New York sports betting has already shattered national sports betting records. New York’s January handle was $1.6 billion, which is more than New Jersey’s previous monthly handle record of $1.3 billion. But New Yorkers only took three weeks to break New Jersey’s monthly handle record. So, it began as an unusual new market.
New York’s sports betting market is striking because it’s behaving like a mature market in its first two months. Based on the weekly data from February, New York sports betting revenue had the Super Bowl dip that’s usually seen in mature markets.
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New York March Madness Betting Seasonality
Sports betting handles peak from September to March. January handles tend to be high, then February handles dips since the Super Bowl is only one event a little before the month’s halfway point. March handles tend to spike and hit the final peak before the slow season begins.
Nevada’s sports betting figures show both patterns clearly. Over the past five years, the peak season ran from September to March and the low season from April to August. NFL and NBA seasons are popular, and bettors spend much of the summer waiting for the next professional seasons.
March handle is also consistently higher than the February handle. (The only exception in the last five years was March 2020 when COVID shut down retail sportsbooks and March Madness.) Again, this is because there is only one Super Bowl but about three weeks of March Madness games.
In its first two months, New York is already adhering to the February dip pattern of mature markets instead of the triple-digit growth in the handle that new markets often see in their second month of sports betting. New York’s behavior as a mature market, even though it is two months old, is the key to our March Madness projections.
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Nerd Box: How We Got The Numbers
We’re projecting that New York March handle will do two things:
- Resemble what a full month of betting would’ve looked like in January
- Rise slightly above what a full month of January betting handle would’ve looked like
To arrive at our revenue projection, we projected what a full month of January sports betting would’ve looked like. We averaged the three full weeks of sports betting handle and added that average to January’s handle to arrive at $2.1 billion. Next, we applied a 4% revenue bump to arrive at $2.2 billion in March 2022 handle.
That 4% revenue bump comes from Nevada. During the peak season, The March handle is about 4% higher than the average peak season month. With only two peak season months to work with in New York, using this small bump gave us a conservative estimate that included anticipated new market growth and the standard March Madness bump. Sports betting handle trends are remarkably consistent across markets, so we’re comfortable with the level of uncertainty this approach alleviates.
To isolate the sports betting handle on NCAA basketball, we looked to other markets again. In Colorado and Virginia, NCAA basketball makes up about a quarter of the state’s total sports betting handle. So we assumed the same would be true for New York. That got us from $2.2 billion in the total handle to $560 million in NCAA handle.
Finally, we got to estimated tax revenue by estimating sportsbook hold and applying New York’s 51% tax rate to it. Over the past two months, New York sportsbooks’ average hold was 6.7%. So, we applied that hold rate to the NCAA handle to estimate about $38 million in taxable revenue from NCAA betting. Finally, we applied New York’s 51% tax rate to arrive at $19 million in tax revenue.
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