Earnings+More January 10: NY Sports Betting Opening Weekend

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NY eclipses PA and NJ on opening weekend

Volume control: The now wholly-unexpected news from the weekend is that according to data from GeoComply betting volumes on day one in New York have eclipsed those from the next biggest state of Pennsylvania. In a pair of LinkedIn postings, Lindsay Slader from the company said that New York saw 5.8m bets struck between 9am-9pm on Saturday versus 2.3m in Pennsylvania and 2.1m in New Jersey. Volume over the weekend totaled 17.2m with 8m coming from NYC’s five boroughs alone.

Instant dataline: Rush Street Interactive said its BetRivers app took $970,381 on Saturday with over $500k bet on football and $271k on basketball. As the smaller of the four brands already available – Caesars, FanDuel and DraftKings are the others – it is likely this represents only a small percentage of the total. Noting the absence of BetMGM, WynnBet, Bally Bet, Pointsbet and the Resorts World offering from the currently available roster, analysts at Jefferies said they expect “meaningful competition albeit more disciplined than other states given the high tax rate in the state.” Commenting on the figures from Arizona last week, they added comments which also apply in NY:

“The Street’s concerns remain not with the opportunity for top-line growth but with the prospects for profitability,” Jefferies added.

Bears den: Also concerned about profitability were the analysts at Regulus who warned that though the early volume of bets likely in New York is likely to be impressive, the distortions caused by the high tax rate will soon be evident. With “normal” levels of bonusing unsustainable, it means reported TAM will suffer while market maturity will be “slower” to occur, particularly as higher value players will likely continue “betting commute” to New Jersey. But the Regulus team also warns about the “trap” of early success.

“Early aggressive bonusing to try to gain share will even drive ‘encouraging’ GGR and tax levels vs. underlying revenue trends, which is basically the industry digging a hole for itself faster,” the Regulus team suggested. “With nine brands currently or soon to be in action, there is just enough competition for the industry to engage in Mutually Assured Destruction.”

Numbers game: Still, simple demographics suggest New York should quickly establish itself as the largest state by handle and GGR. Meanwhile, EKG analysts noted that adding New York sees the percentage of the population that now reside in states where sports-betting is legal rises to 36%. That could rise to over 40% should Ohio, Louisiana and Maryland (legal but not yet operational) open as planned this year.

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