Competition for the top spot in New York’s mobile sports betting market has been hot, and the unique costs of operating in New York have taken a toll.
FanDuel New York came out on top in Q1 in terms of the total percentage of the sports betting handle. The top three sportsbooks – FanDuel, Caesars New York, and DraftKings New York – each held a significant percentage of the market. BetMGM New York trailed, thanks to a strategy to build slower, more sustainable growth over time. PointsBet New York and BetRivers New York have significantly smaller shares than the top four.
By the end of the first quarter, the New York sports betting market’s overall handle was a little over $4.8 billion. Here are the percentage shares for each of the top four sportsbooks from the quarter ending March 31, 2022:
- FanDuel 36.7% (handle $1.76 billion)
- Caesars 25.4% (handle $1.22 billion)
- DraftKings 24.5% (handle $1.18 billion)
- BetMGM 8.5% (handle $410 million)
Of course, total handle share only tells part of the story. The sportsbooks are expected to release their full Q1 earnings results in May 2022, where we’ll see actual earnings and losses across the market.
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Caesars Starts Hot But Cools Off
Caesars came out hot in January, with a massive marketing and promotional spend that won them the No. 1 spot and over 40% of the New York mobile sports betting market.
The week ending Jan. 23 was the first that all four of the top sportsbooks were in full operation, and here’s how they stacked up against each other.
- Total Handle: $572,552,146
- Caesars: 40.1% (handle $229,709,718)
- FanDuel: 27.9% (handle $159,653,476)
- DraftKings: 22.9% (handle $131,058,363)
- BetMGM: 7.1% (handle $40,569,269)
In February, Caesars CEO Tom Reeg told investors that Caesars would “dramatically curtail” marketing spending in New York and focus primarily on new states. The decision stemmed from their success in winning market share, as well as concern about earnings long-term.
“We set out to become a significant player and it’s happened significantly quicker than we thought,” Reeg said.
As a result, by March 31, Caesars had dropped from 40.1% to 25.4% of the overall handle, while FanDuel had moved into first place with a 36.7% share.
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In Contrast, BetMGM Bets On Slow, Steady Growth
While BetMGM is trailing the other top three sportsbooks in the New York market, Entain CEO Jette Nygaard-Andersen expressed confidence that the numbers reflect consistent growth in line with the company’s expectations. Entain owns BetMGM in partnership with MGM Resorts International and released its first-quarter report last week.
According to Nygaard-Andersen, BetMGM didn’t market as aggressively as other sportsbooks because it was more interested in long-term sustainability.
“We are determined on building a sustainable business here,” Nygaard-Andersen said. “I think it’s a really good sign that we are seeing some of the other operators being open about them dialing down their promotional spend here after the first couple of months in New York…We are here to build a sustainable business for the future, so we are being rational around our spend when it comes to marketing,” she added.
As of April 10, BetMGM had increased its share of the total handle to 10.8%.
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The Challenge Of The New York Sports Betting Market
The New York market has posed a challenge for sportsbook earnings. Any time a major market opens, sportsbooks significantly increase spending on marketing, bonuses, and promos to compete for market share.
At the same time, New York has the highest tax rate on mobile sports betting, at 51%. In other states with high tax rates, like Pennsylvania, promos and bonuses are tax-deductible. Not so in New York, so sportsbooks take the full hit of promotional spending, in addition to paying high taxes in the state.
This one-two cost punch has meant that sportsbooks are operating at a loss in New York. In the first two months of operation, one analyst estimated that New York mobile sports betting operators may have lost up to $200 million.
In February, DraftKings announced lower-than-expected customer numbers in the fourth quarter of 2021 and predicted a higher-than-expected loss for 2022.
First Numbers Of Q2 Show Similar Trend
In the latest numbers, FanDuel has continued its first-place run, while Caesars continued its drop and now ranks third below DraftKings.
BetMGM has continued to show slow but consistent growth.
Week ending April 10, 2022:
- Total Handle: $335,812,711
- FanDuel: 42% (handle $142,036,677)
- DraftKings: 24.9% (handle $83,517,552)
- Caesars: 14.7% (handle $49,359,984)
- BetMGM: 10.8% (handle $36,251,500)
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