- FanDuel has announced a partnership deal with the New York Yankees.
- The multi-year deal gives FanDuel ‘Official Sports Betting Partner’ status.
- Despite blowout revenue numbers, New York facing sportsbooks are losing millions due to high taxes and burdensome regulations.
Everything you need to know about what’s wrong with US sports betting can be seen in the dumpster fire that is New York. The state *should* be a veritable ‘license to print money’ for everyone involved but it’s not simply because New York state government won’t let it happen. The state’s sports betting ecosystem has been designed to structurally prevent anyone *but* the state from turning a profit.
Actually, that’s not quite correct–the politically juiced in ‘legacy gaming providers’ that sports betting companies are forced to partner with make a little bit of money. Since most deals of this type give the ‘in-state partner’ a 10% to 15% cut and they don’t actually need to do much it’s pretty lucrative. As for sportsbooks, you can add that 10% to 15% cut on top of the state’s 51% extortion tax and that’s all you need to know about why no one else will make money in New York. Eventually, players will figure out that they’re also getting screwed in the process. Unfortunately, New York being New York there’s not much chance that the state government will care.
At this point, word on the streets is that the sportsbooks operating in New York are losing hundreds of millions despite the huge population and blowout revenue numbers. Once the state indicated that they would seriously be going with a 51% tax rate, that should have been a deal breaker for every gaming company on the planet. Throw in deposit bonuses that aren’t tax deductible, a race to the bottom to see how much money they can give away in a desperate attempt to earn market share and the cost of advertising in the country’s most expensive media market and there’s no way to describe sports betting in New York as anything but a quagmire. Right now, the only hope that the companies offering sports betting in New York can ever be profitable there is for the state to drastically cut tax rates. If you’re running a company and your only realistic chance of turning a profit is some sort act of beneficence by the state government you’re doing it wrong.
In the meantime, companies with money to throw around in New York are continuing to do so. What they hope to gain out of it isn’t quite clear. They could be a in a situation where they *have* to keep the signups and revenue coming in hoping to not dig a deeper hole. Or they could remain in the denial that there’s no viable option under the status quo regulatory framework that is in the best interest of stockholders other than packing up and leaving the state. Personally, I sold all of my stock in the publicly held companies that tripped all over themselves to enter the New York market. I don’t think investing in companies that don’t take their fiduciary responsibilities seriously is a good idea.
Anyway, FanDuel is continuing to throw money into the incinerator and today they announced a partnership with the New York Yankees. In a move with no demonstrable benefit to the bottom line, they’re now an ‘Official Sports Betting Partner of the New York Yankees’. Terms were not announced but whatever they are you can add that on top of the 51% tax rate and 10% to 15% ‘tethering partnership rate’ that they pay for the ‘privilege’ of operating in the Empire State. Lest you think that FanDuel isn’t getting *anything* out of the deal:
Under the terms of the agreement, FanDuel will be permitted use of New York Yankees’ marks. Additionally, FanDuel will have premium VIP hospitality accommodations at Yankee Stadium along with integrated FanDuel signage in right-field and rotational signage behind home plate during television broadcasts.
Mike Raffensperger, CMO of FanDuel Group, talks about the partnership with the ‘hometown team’ and the iconic Yankees brand:
“There is no more globally recognized sports brand than the New York Yankees, and as a New York-based company we’re delighted to remain partners with our hometown team. One of our company values is to be absurdly fan-focused and there is no fanbase more passionate about their team than Yankees fans which makes this a natural fit.”
Which begs the question–‘why is FanDuel Group still operating out of New York?’ instead of a state that isn’t openly contemptuous of a competitive marketplace for sports betting? Never mind the massive expense of maintaining offices in the NYC market. Why not head to Colorado? Or at least over the river to New Jersey? Or one of their other existing US offices in California, New Jersey, Florida, Oregon, or Georgia.
Michael J. Tusiani, New York Yankees Senior Vice President, Partnerships, is happy that he’s on the receiving end of FanDuel’s reckless promotional spending:
“We are very excited to be continuing our relationship with FanDuel—our Partner since 2020. We hope that FanDuel’s Yankee Stadium presence and customer engagement will continue to strengthen its brand as a sports betting operator within the tri-state area.”
Meanwhile, over in London–the stock price of FanDuel parent Flutter PLC is just off a 52 week low. Sure, the entire financial market ecosystem is in the toilet but I can’t imagine that the state of the US sports betting market does anything to help.