As per an analyst, New York sports betting operators have lost about $200 million since launching in the Empire State on January 8. Even though it’s true all of the active NY online/mobile sportsbooks have recorded record-breaking handles over the last two months, there is a caveat. To attract new customers, all six active NY operators had to invest a lot of money in promoting their sportsbooks.
Sportsbook Promotions Cost a Lot
A few weeks ago, we reported that NY sportsbooks had generated almost $450 million in handle, which brought them a profit of over $21 million. The trouble is that in order to make money, sportsbooks need to spend money. And they’ve been doing exactly that – investing huge amounts of money in promos.
According to an analysis, the average cost of promotion is between $100 and $150 per player on average. It’s estimated that the six New York sportsbooks have attracted almost two million New Yorkers since January. In turn, this means that it’s very likely that the amount they’ve spent on promos so far is over $200 million.
Some sportsbooks have been investing more money in promos than others. Caesars Sportsbook, for example, is giving a $1500 welcome bonus to its new customers. Knowing this, it’s no surprise this operator is leading the way when user registration and monthly handle are concerned.
Losses Don’t Worry the Operators
An operator that failed to secure a license reportedly joked about saving a lot of money by not getting licensed. However, the truth is that all the operators were prepared for short-term losses. According to DraftKings CEO Jason Robins, the company is targeting “a two-to-three-year path to profitability.”
In order to get new customers, sportsbooks need to invest in promos, which costs a lot of money. However, once enough people sign up, the need for promotion goes down. Knowing that NY sportsbooks have already gotten more users than expected, it’s likely that they will start making profits sooner than planned.