New York online sports betting saw a robust performance in August, recording $1.43 billion in bets as the state prepares for the lucrative NFL and college football seasons. According to the New York State Gaming Commission, the state generated $124.9 million in gross gaming revenue for the month, leading to more than $63.7 million in tax revenue.
For the first time since May, DraftKings topped FanDuel in terms of online sports betting handle, reporting $526.7 million in August compared to FanDuel’s $511.6 million. However, FanDuel remained ahead in gross gaming revenue, posting $52.6 million compared to DraftKings’ $43.3 million.
New York ended August on a high note, with $401.4 million in bets placed during the week ending Sept. 1—the state’s highest weekly total since May. Gross gaming revenue for the week was $30.4 million, positioning the state for a successful football season. Both NFL and college football saw their first full weekends of action as bettors flocked to place wagers.
The New York State Gaming Commission reported the following weekly handle totals for its nine active sportsbooks:
ESPN BET, expected to launch in New York by late August, has yet to go live despite securing market access through a $25 million deal with Wynn Interactive Holdings. While PENN Entertainment CEO Jay Snowden promised the launch would coincide with the start of the college football season, the app remains unavailable as of mid-September.
Since the state’s January 8, 2022 launch, FanDuel is the only sportsbook to surpass $19 billion in total handle, solidifying its position as the top operator in New York. Here are the total handles for each sportsbook since launch:
For the week ending Sept. 1, New York’s nine sportsbooks reported $30.4 million in gross gaming revenue, resulting in $15.5 million in tax revenue at the state’s 51% online sports betting tax rate. Here’s a breakdown of weekly gross gaming revenue:
Since launching in January 2022, here are the total gross gaming revenues for New York’s sportsbooks:
As New York barrels into the heart of football season, both NFL and college football are expected to drive substantial growth in sports betting handle and revenue. With DraftKings gaining ground on FanDuel and the much-anticipated launch of ESPN BET on the horizon, the Empire State remains a key player in the online sports betting market.
DraftKings is considering alternative solutions to manage high state taxes on sports betting, after withdrawing a controversial surcharge fee on winning bets. The decision came following negative customer feedback, as competitors like FanDuel opted against implementing a similar fee.
During the Bank of America Gaming and Lodging Conference last Thursday, DraftKings CEO Jason Robins discussed the surcharge fee, which was announced and then swiftly retracted within 13 days. The plan was initially designed to offset high taxes in certain states, including Illinois, where tax rates for large sportsbooks have risen to 40%. However, the fee faced significant backlash from customers and was quickly abandoned.
Robins explained the company’s rationale behind the surcharge, stating that it was intended to allow for more investment in promos and other customer benefits. However, after considering the negative response from customers and industry observers, the company chose to abandon the idea.
“Clearly, this was something that our customers — they didn’t like this type of solution,” Robins said. “So we changed it.”
Despite the public criticism, Robins defended the company’s approach, stating that the surcharge was never fully implemented, and the decision to reverse course was part of a deliberate strategy.
“We can always say we changed our mind,” Robins noted. “We decided to throw it out there and see what the reaction from customers was… and determined it wasn’t the right thing at this time.”
While the surcharge is off the table for now, DraftKings continues to explore other options to manage the impact of high state taxes. Robins hinted that future solutions could emerge as sports betting operators adapt to the evolving tax landscape.
“There is something that maybe isn’t exactly this that I think could be a solution,” Robins said, although he declined to elaborate on specific plans.
The challenge posed by high taxes, particularly in states like Illinois, remains a concern. DraftKings expects to lose $50 million next year due to the Illinois tax increase, which has raised rates from 15% to 40% for larger sportsbooks. The Sports Betting Alliance, an industry lobbying group, has warned that these tax hikes could fuel the black market and degrade the quality of promos, odds, and other betting products.
Unlike DraftKings, FanDuel has chosen a different approach to dealing with the Illinois tax hike. Rather than implementing a surcharge, FanDuel has opted to reduce its marketing efforts and moderate its levels of promotions.
“We believe that moderating our levels of generosity or reducing local marketing efforts is a more effective response to higher tax rates,” said Peter Jackson, CEO of Flutter, FanDuel’s parent company.
As states like Illinois continue to increase taxes on sports betting, operators are left to find creative ways to mitigate the impact on their bottom lines. DraftKings and FanDuel have both confirmed that they do not plan to introduce state-specific odds or pricing despite the financial pressures.
With football season underway and DraftKings stock rebounding to $36.11 after hitting a low of $29.83, the company’s ability to navigate these challenges could play a significant role in its future market performance.
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