ATLANTIC CITY, N.J. — On a day when New York Gov. Andrew Cuomo did an about-face and embraced mobile sports betting as a way to deal with financial losses stemming from the coronavirus pandemic, a company that tracks gambling legislation and performance predicted that revenue from legal sports betting could reach $3.1 billion in 2021 and as much as $10 billion within five years.
VIXIO GamblingCompliance issued a report Wednesday projecting that at least six and as many as 14 additional states will legalize or expand sports betting in 2021. That fits with projections by numerous analysts that nearly half the country may have legalized sports betting by the end of this year.
The company estimated that revenue from sports betting would reach $2.6 billion to $3.1 billion this year, an increase of as much as 100% over the $1.55 billion it estimates will have been generated from sports betting in 2020 (December figures have not yet been reported from most states).
By 2025, that figure could hit $10 billion, the report said.
Sports betting revenue represents money remaining after sportsbooks pay off winning bets and other expenses. It is separate from — and much less than — the total amount wagered on sports, which is called “handle.” States collect taxes on the amount of money their sportsbooks retain from sports betting, not on the total amount wagered.
The report came as Cuomo reversed his long-held opposition to mobile sports betting, opening the possibility of a lucrative new market in one of the nation’s most populous states. It also could take a big bite out of New Jersey’s leading position in the national sports betting market; about 20% of New Jersey’s sports bets are placed by New Yorkers crossing the state line.
At a news conference, the Democratic governor proposed having New York run sports betting operations to maximize tax revenue.
“At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets,” he said. “New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting, we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis.”
He called on the New York State Gaming Commission to issue a request for proposals to select and license a sports operator or platform to offer mobile sports wagering in the state.
Yaniv Sherman, head of commercial development at 888 Holdings, a sports betting company, welcomed a possible full-scale entrance of New York to the national market.
“New York has always been the critical, strategic and much-anticipated component of any U.S. online gambling agenda, and it represents one of the top three states in terms of economic potential,” he said. “It’s no surprise that this is moving on the back of budget deficits in states like New York, and I think it’s a great way of bringing tax dollars from offshore operations to the city and state coffers.”
Likewise, Adam Greenblatt, CEO of BetMGM, said his company is eager to enter New York’s expanded market, saying Cuomo’s move “has the potential to bring leaking tax dollars back to New York from offshore books and nearby states.”
Sara Slane, a gambling analyst and former official with the American Gaming Association, predicted New York quickly would become a top-tier state in the sports betting market.
“Gov. Cuomo’s embrace of mobile sports betting immediately positions New York to soon lead all other states and generate significant revenue for state coffers,” she said. “New York, with a population of nearly 20 million, dwarfs any other state with legal betting and should have no problem regularly topping $1 billion a month in wagers.”
New York, like most states, expects to have a smoking crater where its budget used to be due to the economic impact of the coronavirus pandemic. That is expected to play a large part in additional states considering or enacting sports betting legislation this year.