The New York City Economic Tracker: October 16, 2023
The New York City Economy Tracker is a joint project between Investopedia and NY1, using publicly available data to evaluate the economic health of the city across a variety of metrics.
For the week of October 16, 2023, we’re looking at how a legal mobile sports betting market has increased tax revenue across New York state.
Mobile Sports Betting Boosts NY Tax Revenue by $740M
Online sports betting has boosted gaming tax revenues in New York state since December 2021, when New York first allowed sportsbooks to open a legal betting market done through smartphones and tablets. In January 2022, four sportsbooks—Caesars Sportsbook, DraftKings, FanDuel, and Rush Street Interactive—began operating a mobile sports wagering market in New York state and were joined by six additional companies later that year.
At the end of fiscal year 2023, the first full fiscal year that a legal mobile sports wagering market was operating statewide, data from the New York state budget revealed that gaming revenues in FY 2023 totaled about $4.6 billion. That number is a full 25% more than 2020, the last pre-pandemic fiscal year without a mobile sports wagering market.
The largest driver of this increase was the introduction of revenues from mobile betting, which totaled $740 million along with $200 million in licensing fees. Non-license mobile sports wagering tax revenues accounted for about 16% of all gaming tax revenues in 2023, the third largest revenue source statewide behind the lottery and video lottery terminals.
New York Sports Betting Revenues Still Trail New Jersey’s
Although mobile sports wagering brought in over a billion dollars in new tax revenues to New York state in the last two years, projections from the latest financial plan for fiscal year 2024 show the state anticipates revenues from the new sports betting market to level off in the near future. Mobile sports wagering tax revenues are forecast to experience a 1.3% compound annual growth rate and total around $790M by fiscal year 2027.
The projected leveling off is even more concerning given how much of the sports wagering market New York state has not yet captured. According to data from the American Gaming Association, the sports gambling industry in New York only generated $69 per capita, versus New Jersey’s $82.
One of the justifications for allowing mobile sports betting in New York was the belief that it would reclaim revenues from bettors who crossed state lines, particularly to New Jersey, to take advantage of online wagering. It remains to be seen if that reclamation will eventually take place.
Mobile Sports Betting Benefits Education Fund But May Show Negative Health Impacts
According to the New York state budget, the vast majority of the tax revenues from mobile sports wagering are used for the state’s education fund. In fiscal year 2023, $729M of the $740M in total wagering revenues were allocated to the NY Department of Education. An additional $5M was given to youth sports initiatives, and $6M was utilized by the New York state Office of Addition Services and Supports (OASAS) to help those struggling with gambling addiction.
In fact, according to the first mandated annual report by the New York Gaming Commission and OASAS, the introduction of the mobile sports wagering market had a notable impact on the usage of gambling addiction resources statewide. Specifically, data through March 2023 showed text messages and calls to the HOPEline gambling addiction support hotline are on pace to be over 29% higher than in 2021. Additionally, sign-ups for the state’s voluntary gambling exclusion program through April 18th, 2023 are on track for a 69% increase compared to 2021.