Is a New York Online Sports Betting License a Good Deal?
Online Sports betting officially became legal in New York after the signing of the budget by Governor Cuomo. Furthermore, with the new law, NY will start taking in proposals from online sportsbooks around July. However, upon closer examination, gambling operators are wondering whether obtaining a New York Online Sports Betting License a Good Deal.
The reason this is brought about is because of the high cost of operating a sportsbook in New York. However, before we get into that, let’s go over the highlights of the Mobile Sports Betting bill in New York. First off, the state will limit the number of licenses to only two online sports betting platform providers.
In addition, the betting platform must have a minimum of four skins. This is because they are more or less making their mobile sports betting model after New Hampshire. Therefore, they want to limit the number of sportsbooks by giving the two gambling platforms a monopoly in the state. However, the law is not very clear about the details. This is because it does not state whether the skinks have to use the technology of the platform provider.
Is Obtaining a New York Online Sports Betting License worth it?
Looking at the gambling model New York is adopting; it becomes obvious that they are in it for the money. This is because they are trying to maximize the state profits while minimizing the profits a sportsbook can make. However, according to Gambling Industry news, experts believe they are overdoing it leaving sportsbooks with little to no profit.
Let’s take a look at the math and to show whether it all adds up or not. First, the cost for a 10-year license is $25 million each with a $5 million sever cost. In addition, the gambling tax is ridiculously high at 50% of the sportsbooks gross gaming revenue.
In a healthy online sports betting market, the tax will be 16%-30%. This allows a competitive market to grow while still making a profit. However, with such a high tax and entry fee, it will take a long time to make any profits.
Furthermore, on average a sportsbook will spend about 25% to 30% of its revenue on advertising. Thus, after the tax we are talking about 80% of their GGR leaving the company. For a small or medium gambling operation, this is obviously not feasible. In addition, even for large sportsbooks it is a risk since they have only ten years to turn a profit.
However, the upside is that it will allow sportsbooks to enter the one of the largest in the U.S. For a large company, it is a heavy blow. Bookmakers are in for the money and the companies that can afford to take the risk have shareholders. Therefore, will shareholders be willing to take the risk of entering the NY online sports gambling market?