Prognosis Shows that NY Betting Might Report Losses Soon

Sports Betting Operators Could Be Losing Money Online Betting

New York Sports Betting Operators Could Be Losing Money

By Blake Roberts Founder & Editor in Chief Updated: 07 March 2022

Blake Roberts Founder & Editor in Chief

Blake Roberts is the founder of Betting.US and is currently heading the creative team as Editor in Chief. Born and raised in Morgantown, West Virginia, Blake is a great sports fan, with football and basketball being his favorite. He’s our trusted voice for all betting-related matters.

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Since launching mobile sports betting just a matter of weeks ago, New York has quickly broken records and enjoyed huge success. In fact, since mobile sports betting was launched, the state has taken more than $2 billion in online sports bets, and this has catapulted it into the lead when it comes to sports betting handle.

While the success of mobile sports betting in the state has been welcomed by state officials because of its impact on state coffers, it might not be quite as lucrative as it appears for sports betting operators in the state.

In fact, a recent report suggests that sportsbooks in New York may have actually suffered losses despite the impressive handle since mobile sports betting went live.

High Taxes and Advertising Costs

According to one analyst, sportsbooks in the Empire State have not yet made a profit and have made significant losses since mobile sports betting launched.

The launch took place on January 8th this year, and since then there have been more than two million player accounts created and over $2 billion placed in online bets. According to the reports, this has still resulted in collective losses of around $200 million for the state’s sportsbooks, and this has been put down to a number of factors.

One of the key things to be blamed for the losses suffered by sportsbook operators in New York is the crippling tax rate. The tax charged has been set at 51 percent, and this is something that has caused a huge amount of controversy. While state finances have benefitted hugely as a result, sportsbook operator profits have been hugely affected.

Calls to Cut Tax Rate

Some have called for the tax rate to be cut because of its impact on operator profits. However, Senator Joe Addabbo said that changes are very unlikely for some time, which comes as no surprise given that the state has raked in more than $91 million in taxes. He said:

That’s the business they’re in and that’s the terms they negotiated. We’ll always consider everything if it makes the product better for New Yorkers. I just think it is premature to start talking about amending the 51% tax rate. Let’s see.

Another key factor that is thought to have had a huge impact on operator profits is the amount that they have invested in advertising. The cost of advertising is said to be around $100-$150 per person, and sportsbooks in New York have apparently pushed the boat out when it comes to advertising efforts.

In addition to the advertising costs that operators have had to foot the bill for, there are also the various promotions that have been put into place to attract more sports fans from competing sportsbooks.

Again, this has had a huge impact on the ability of the operators to make any profit during the initial stages of mobile sports betting despite the record handle.

Many now hope to see improvements in terms of sportsbook profits as well as the ongoing success of mobile sports betting activity in the state.