Governor Andrew Cuomo has made it official. He intends to steer New York’s legalization of mobile sports betting toward a state-managed system similar to a lottery.
The plan was formalized by the governor on January 19 in his State of the Budget address for the 2022 financial year.
Cuomo, who always held that sports wagering couldn’t be expanded to New Yorkers’ phones and laptops without a constitutional amendment, has relinquished that position in light of the Covid pandemic, which has ripped a hole in state finances estimated at $60 billion over the next two years.
Now he’s enthusiastic about the prospects of mobile sportsbooks, and recently described the state as “potentially the largest market in the nation.”
But as the three-term Democrat qualified this in his budget address, “The question isn’t whether or not we do mobile sports betting,” he said. “The question is more how and who makes the profit. This is very lucrative.
“One proposal is we allow casinos to run mobile sports betting. That’s very good for casinos and the people who support casinos.
“The second alternative is to have the people of the state of New York actually get the profits from mobile sports betting and run it the way we run the state lottery. That’s where it’s state-run and the state gets all the revenue.
“I’m with the people. I believe the people of the state should get the revenues. This is not a moneymaker for private interests to collect just more tax revenue. We want the actual revenue from the sports betting.”
According to his plan, the New York Gaming Commission would request proposals with the aim of selecting a provider, possibly more than one, to take bets at the four upstate commercial casinos. In return for the exclusivity, the state would expect a major share of the revenue. In New Hampshire, where sports betting is run by the state lottery in partnership with sports betting giant DraftKings, the state collects 51 percent.
It’s an ambitious plan. Cuomo’s Budget Director Robert Mujica estimates a fully mature market organized along these lines would garner the state $500 million a year, as opposed to a market-oriented, multiple-license system similar to New Jersey’s, which he says would generate only around $50 million.
A 2017 Oxford Economics study estimates that based on a 10 percent tax rate, New York could expect around $123 million in tax revenue a year. This is derived from the firm’s $235 million projection for California, the most populous state in the nation, in an open, competitive market.
On the other hand, Bank of America analyst Shaun Kelley stated his belief last year that legal sports betting could grow to a $15 billion market nationwide in 10 years, with $3 billion of it locked up by the four states with the largest populations𑁋California, Texas, Florida and New York. With about 4 percent of the market, New York could generate $600 million annually, he said.
Either way, Cuomo’s plan appears set for some robust debate with expanded betting’s leading proponents in the Democratic-controlled Senate and Assembly. The gaming committee chairs, respectively, Joseph Addabbo and Gary Pretlow, have jointly introduced a bill to allow the casinos to partner with two sportsbook operators each and would open the market to tribal casinos, OTBs and pro sports venues, permitting 14 licenses in all. At a 12 percent tax rate, the measure envisions $79 million for the state annually at full build-out.
“Unfortunately, at this point it differs with the governor’s intentions, but we are hopeful we can negotiate a successful mobile betting scheme,” Addabbo said at hearings on the bill last week. “This is an inclusive bill that has widespread industry support with analysts and legal scholars in the gaming industry. It really depends how we negotiate this during the budget process.”
It could depend on more than that. There are lawmakers who want to see the bill broadened to include the state’s racinos. There are also potential legal obstacles, some of which echo Cuomo’s previous opposition and center on whether the state Constitution, which was amended some years back to permit sports betting at licensed casinos only, allows the servers required to run such operations to be placed in non-casino settings.
Bennett Liebman, an Albany Law School attorney who previously served as an advisor to the governor on gambling issues, put it this way:
“You’re really playing with some difficult issues here,” he told industry news site SportsHandle. “I’m not sure everyone has thought it out.”
