The companies’ sports-betting revenue would be taxed at 51%, one of the highest among states where sports wagering is legal, said regulators. Still, New York’s huge population represents a potentially lucrative mobile betting market for gambling companies. New York has estimated that mobile gambling will eventually generate about $482 million in annual tax revenue from a $1 billion sports wagering market.
The New York State Gaming Commission voted on Monday to approve two groups of betting operators for 10-year licenses. In one group, FanDuel organized with DraftKings, the online division of Bally’s Corp. and BetMGM, a partnership of MGM Resorts International and Entain PLC.
The other group includes Rush Street Interactive Inc., Caesars Entertainment Inc., the online division of Wynn Resorts Ltd., PointsBet New York LLC and Empire Resorts Inc. doing business as Resorts World. The group also includes Kambi Group PLC providing some betting technology.
The approvals mean that New Yorkers will be able to make bets on their mobile phones; the state had previously limited sports betting to wagers made in person at casinos. Betting operators are in control of when they want to launch, regulators said.
New York is "vital to ensuring nationwide leadership in sports betting and iGaming over time," BetMGM Chief Executive Adam Greenblatt said in a statement.
Among the companies rejected by New York state were Fanatics Inc., the sports-merchandise retailer looking to move into sports gambling, and Penn National Gaming Inc., which operates the Barstool Sports app.
DraftKings shares were up 2.4% on Monday, while Caesars shares ticked down 1.1% and MGM Resorts fell 3.6%. Penn National shares were down 4.5%.
The prospect of operators turning over more than half of their profits after paying out winning bets may make the financial calculus for operating in New York more challenging than it is in other states with lower tax rates, gambling executives say.
In New Jersey, one of the biggest sports-betting markets, about 90% of wagers were placed online rather than inside a casino, this year through September, according to the state’s Division of Gaming Enforcement. Online sports wagering revenues are taxed at 14.25% in New Jersey.
Sports-betting tax rates in other states vary, including 6.75% in Iowa and 36% in Pennsylvania, according to the industry trade group American Gaming Association.
Thirty-two states and the District of Columbia have legalized sports betting, though not every state has embraced online gambling. Mobile wagering is operational in at least 18 states and D.C.