NEW YORK (NewsNation Now) — Sportsbooks are luring new gamblers with enticing promotions ahead of the big NFL playoff weekend.
Sportsbooks are competing neck and neck trying to outdo their competition, ostensibly offering free money to get new gamblers on board. It sounds too good to be true but these huge companies can basically give away money to get you into the game.
“What they’re fundamentally doing is renting the customers’ attention,” Alexander Kane, founder of SportTrade, a prelaunch sports betting exchange.
Kane says the customer acquisition cost in the space is quite high.
“It can be between $200 to $800 to acquire a customer, but the interesting thing is we’re seeing in New York is actually gonna be quite a lot higher,” Kane said.
New Yorkers went wild in the first three days sports gambling was legal earlier this month, betting more than $150 million. According to GeoComply, a cybersecurity firm that tracks this data, from Saturday through Monday on opening weekend, more than 1.2 million accounts were active in New York, with 878,000 unique players. Nearly 90% of these bettors were new to regulated sports betting.
“The premise is you want to always match a free bet you’re getting from one venue, or from one operator, with a free bet of the other,” Kane said. “There’s a lot of ways to do it, it can get very involved. But at a super high level, you’re betting both sides of the event. If you’re betting both sides of the event and with the free money you can’t possibly lose.”
Of course, you can eventually lose money. But bettors aren’t the only ones reaping the benefits of sports betting. States are also cashing in.
Since 2018, more than 30 states have legalized the practice, and at least 20 have gone live. In total? States have earned more than $905 million in tax revenue from sports betting. But where does the money go?
Some states like Delaware, Pennsylvania, Rhode Island, have all their money go into a general fund to be used at the state’s discretion from anything from road work to social services. They’re among the states with the highest tax rates on each gambling dollar.
For example, the Ocean State, Rhode Island, collects 51% of revenue from each bet. The other states used the revenue to target specific services. In Montana, it goes to fund STEM scholarship funds. In Illinois, it’s specifically directed to fund improvements to roads and schools.
The federal government also takes a cut. There is a federal tax to every bet of about .25%.
Now, national attention is on California, where there’s an initiative to allow sports betting at tribal casinos and horse-racing tracks on the November 2022 ballot.
There have already been several attempts to get sports gambling on the docket in the state, but they have all failed so far. However, if California does end up legalizing sports betting this year, more than two-thirds of Americans would live in a state where sports gambling is a part of everyday lives.