How Much Sports Betting Revenue Has New York Lost By Not Legalizing Three Years Ago?

New Jersey has become the sports betting capital of the United States since it went live in 2018, unseating Nevada in many ways.

And nearby New York has been a mere spectator as money pours in across the river — much of it from its own residents.

New York has in-person sports betting, and has generated a whopping $3.7 million in tax revenue since opening in July 2019, per Sports Handle. New Jersey did north of $10M in October alone.

So just how much has New York cost itself by not legalizing online sports betting when New Jersey did? We ran an analysis late last year that estimated the tax revenue that every state has missed by not adopting a similar legal sports betting framework to NJ.

New York came in at $166.3 million per year using the same parameters as New Jersey.

Now that we know New York's tax rate on gross gambling revenue — a wild 51% — we can make an even better guess.

NJ was always going to launch online betting first because it fought PASPA all the way to the Supreme Court and had its plans in the works for a decade. But New York could have gotten live on a similar timeline to Pennsylvania, which launched mobile betting in the summer of 2019.

For the sake of this exercise, we'll use the same launch time as New Jersey, which would have given New York a first-mover advantage like its neighbor.

Here's what else we know:

• New York has 2.14x the population of New Jersey (9.2M vs. 19.83M).
• In 2020, FanDuel and DraftKings estimated 20-25% of their betting handle in New Jersey came from New York residents crossing the border. That's always felt a bit aggressive, so we'll go with 20%.
• New York will tax operators at a 51% rate on gross revenue.
• Two other states have 51% tax rates — Rhode Island and New Hampshire — and bettors are not affected.
• NJ and NY have a similar gambling culture.
• New York will not have online casinos to start, but New Jersey has generated $648M in tax revenue from iGaming since 2013.

So using a somewhat crude projection system that adjusts for population and removes New York bettors from New Jersey's handle, we can estimate that NY would have brought in $1,252,822,018 in tax revenue from sports betting alone since 2018. It's not even including the $25 million one-time license fee books must pay.

This might be a slight overestimation in the long run given that the tax rate and fewer operators will prevent the market from being competitive like New Jersey. New, innovate operators like betting exchanges could add some serious money to the Garden State that New York won't have because those books can't afford to get in.

But it's jarring nonetheless to see a billion dollars left on the table. And we know there's a massive appetite for sports betting and gambling in New York.

This doesn't even account for tons of other downstream revenue opportunities:

• Sportsbook ads are plastered all over the trains and NJ Transit stations.
• Sportsbooks are advertising aggressively on local TV and radio stations.
• Some pizza boxes even have DraftKings branding all over them. Good for those pizza places!

Because of the tax rate, you may not see that level of advertising long-term in New York, DraftKings CEO Jason Robins said last month. That's another place a less-competitive market dominated by DK and FanDuel will prevent additional revenue.

But there's no doubt the money flowing into the state won't just be that big tax revenue number — all kinds of businesses will benefit.

What About iGaming?

Sports betting is a tough business and margins are razor-thin. Nevada casinos make far more money on table games than on sports betting, given all the overhead required.

Even in a sports-heavy month like November, sports betting made up about 10% of Nevada casinos' net winnings.

Naturally, it's the same way online. iGaming is incredibly lucrative because operators use third-party technology that scales easily, and the odds are stacked in their favor.

New Jersey has generated $648M in tax revenue through online casinos and poker since 2013. That's at a 15% tax rate.

With double the population, New York could have brought in at least another $1B with iGaming.