(Bloomberg) -- Whitney Tilson regularly warns readers of his daily financial newsletter that “sports betting is a sucker's game” and that they shouldn't get hooked.
That hasn't stopped the 55-year-old former hedge-fund manager from going all in. Since New York state legalized digital sports gambling three weeks ago, Tilson says he's won over $7,000.
His advice: “The companies are banking on people getting hooked,” said Tilson, founder of Empire Financial Research. “So you have to be clever and outwit them.”
Online betting has been arriving in major cities around the globe for years. But New York City offers one of the world's richest markets, thanks to the metro area's two professional football teams, two baseball teams, hockey squads and soccer clubs. From Jan. 1 through Jan. 25, five major betting apps, BetRivers, Caesars, DraftKings, FanDuel and BetMGM, saw a combined 23.7% gain in monthly active users nationwide, rising to 7.3 million, said Adam Blacker, a vice president of mobile analytics firm Apptopia.
Free money sloshing around has been a big draw. Gambling companies have pushed promotional credits as large as $1,000, reeling in first-time bettors. More than 1.1 million accounts were created in New York in the first two weeks of legalization, according to GeoComply Solutions Inc., which monitors transactions. Nearly 90% of the players are new to regulated digital sports betting, GeoComply said.
Players swamped the games from the moment they became available Jan. 8.
“We underestimated the number of people that would come out of the woodwork as the clock struck to open the New York market on a Saturday at 9 a.m.,” said Lindsay Slader, managing director of gaming at GeoComply.
In New York City, betting has captivated many social circles weeks before some of the biggest U.S. sports events. Veteran bettors say friends who are casual fans are now tuning into weekend football games with money on the line. Sportsbook ads are plastered across television shows, social media feeds and highway billboards.
Mobile money is nothing new to Gen Z and Millennials. Thanks to apps like payment service Venmo and stock-trading platform Robinhood, many people are already used to having finances at their fingertips. Digital accessibility makes spending and saving — or winning and losing — instantaneous.
Many players say promotional deals make them feel as though they're gambling “toy money” or “house money.” The risks don't seem as tangible online as they do in a casino.
“You used to go to the bar and it was, ‘Oh, who's your favorite sports team?' Now, it's, ‘What bets have you placed,' which I think is a big pressure just to have something,” said 24-year-old Henry Sonnenfeldt, an Upper West Side resident who recently picked up sports betting.
Betting in New York has been a raffish pursuit. In past decades, players could join illegal numbers games, betting on the daily stock-market totals, or go to clandestine bookie operations for sports. They could visit horse tracks like Aqueduct in Queens, or Monmouth Park in New Jersey, or dingy Off-Track Betting shops. They could venture to the casinos of Atlantic City, and in recent years, take a train or ferry to New Jersey, which legalized digital sports betting in 2018.
Spencer Eagleton, a 24-year-old who works in finance, said that last year he took a train under the Hudson River to bet on the Super Bowl.
“I'm good friends with a bunch of friends from Jersey, and whenever they'd go home, they always used to place bets,” Eagleton said. “Now that it's legal, it's different. But they used to just go home and place all their bets for the next two or three weeks.”
New Jersey, whose residents bet a total of $10.9 billion last year, held the country's largest sports-betting market by revenue for months. Without the New York commuters, that's likely to shrink.
Gambling analyst Lou Monaco, who goes by “Sweet Lou” on Twitter, predicts that New York will surpass New Jersey in as soon as one month. “It's going to be a battle for the betting dollar,” Monaco said.
New York takes a 51% cut of the companies' gross revenue. The state expects to reap $249 million from digital sports betting operators in fiscal 2022, according to budget documents, some of which will be spent on youth sports and education — and addressing gambling problems.
Dom Coppola, a 25-year-old New Yorker, said he was a habitual user of online casino apps when he lived in New Jersey, playing blackjack and poker. Losses prompted him to take a break. Now, he said, fat incentives tempted him to download the apps again.
“It's incredible how well they work,” Coppola said. “I've taken pretty much every free bet possible and available. And don't get me wrong, when you win money off that, it feels like house money. But when in reality, I'm still digging myself out of that same hole that I was in.”
One FanDuel offer gives the gambler a risk-free bet up to $1,000. Another gave people who bet on the New York Knicks more favorable odds the more of them piled in.
Tilson, the financial newsletter writer, said he bets only when the odds are significantly in his favor. With the Super Bowl and the NCAA basketball tournament ahead, Tilson said he plans to keep his accounts active as long as the companies keep throwing money at him.
“I ran a hedge fund for 18 years. It was my profession to be unemotional in calculating odds,” he said. “I'm not at all worried about myself being sucked in.”
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