VSO Analysis: Why Has New York Betting Handle Dropped for the Fourth Straight Month?

  • New York has now established the country’s biggest wagering market, surpassing New Jersey
  • However, its handle dropped for the fourth straight month in July to its lowest total yet
  • The lack of sports is causing a decline in markets across the US, including NJ and Pennsylvania
  • NY sportsbooks are also beginning to dial back marketing after spending too much on launch
  • The cost of living is rising and a recession is most likely on the way, according to experts
Downward trending graph
In New York, sports betting handle is only heading in one direction, and VSO News has assessed reasons for the downward trend. [Image: Shutterstock.com]

A bad few months

Before New York first legalized its mobile sports betting market in January this year, sportsbooks had extremely high hopes. Towards the end of 2021, Kambi vice president of sales Sarah Robertson told VegasSlotsOnline News it had the potential to become a “huge market,” and considering it’s the most populous state to offer online betting to date, you can understand why.

It’s fair to say the market met those hopes in its opening months. New York sportsbooks generated a staggering handle of $603m in just their first nine days, and built on this performance to surpass New Jersey by the end of January. They hit $1.69bn in wagers in their first month, generating more than $1bn each subsequent month.

the first month that New York failed to hit $1bn

In July, however, that pattern came to a halt. It marked the first month that New York failed to hit $1bn in handle since its launch, with sportsbooks reporting roughly only half of the handle made in January or March this year. Concerningly for sportsbooks, it also represented the fourth straight month of declining betting volume for the state.

As this downward trend persists, New York sportsbooks that have already forked out hundreds of millions on marketing may begin to worry. But would that concern be justified?

Bring on September

In good news for those sportsbooks, the main issue they’re facing is not permanent. Most of the North American Major Leagues, including the NFL, NBA, and NHL, are currently in recess. This has seen a decline in all sports betting markets across the US, not just in New York.

Demonstrating this impact, New York actually remains the best performing betting state in the country despite recording its worst monthly total in July. Its biggest contender New Jersey is yet to report its July figures, but the Garden State saw handle of just $633.2m in June, dwarfed by New York’s $1.06bn total.

Like New York, New Jersey mobile handle has declined since March. The state has not surpassed $1bn for the past three months. This is the same downward trend seen in the other top states, including Pennsylvania and Nevada.

The return of the NFL and NCAA in September can not come soon enough for sportsbooks. It will also provide a solid indicator of whether dropping handle is merely a result of the decline in betting options. Indicating the importance of these competitions, New York recorded its second-highest handle in March as a result of March Madness, when residents placed bets totaling $1.64bn.

Unsustainable ads

While the lack of sports might only be temporary, New York is facing a far more concerning challenge in regard to marketing. An analyst, quoted by the New York Post in February, claimed that NY sportsbooks had lost around $200m due to huge marketing spend. According to the analyst, Caesars Entertainment and DraftKings were spending around $100 to $150 per customer through welcome bonuses.

I got lucky by not winning a New York license.”

Undoubtedly, this tactic has generated results, with Caesars CEO Tom Reeg confirming the operator had taken on double the volume of bettors expected. However, marketing spend has combined with a 51% tax on sportsbooks’ gross revenue, eating into the bottom lines of already struggling operators. This prompted one sportsbook exec to tell the Post: “I got lucky by not winning a New York license.”

American Gaming Association boss Bill Miller has described the US sportsbook battle for market share as an “unsustainable arms race,” and it’s certainly starting to look that way in New York. A number of sportsbooks have announced a cutback on ads. This includes Caesars, who has seen heavy losses in its digital segment throughout the year-to-date.

As these major operators begin to dial back marketing, it may prove detrimental to overall handle as potential customers are less exposed to sportsbook ads.

Worse on the horizon

Due to many factors, including the pandemic and the war in Ukraine, sports bettors across the US are also facing a rising cost of living and even a potential recession. In fact, according to a Bloomberg survey of economists, the chances of a recession in the next 12 months are as high as 48% in the US. This means more layoffs, fewer jobs, and higher interest rates.

As bettors begin to feel the pinch from these issues, they have less expendable money to wager on their favorite teams. For the time being, gambling industry execs believe that this is yet to majorly impact the sector. Speaking last month, MGM CEO Bill Hornbuckle said business has continued to grow in Las Vegas at least, although he believes the effects are on the way.

Again, September will provide a major indicator of whether this impact is already evident in New York. For now, only time will tell.