Confusing New York Mobile Sports Wagering Plan is a Losing Bet

Confusing New York Mobile Sports Wagering Plan is a Losing Bet
© USA Today

New York’s online wagering bill, as it stands, has some sure-fire winners.

Those winners would be New Jersey and, most significantly, illegal offshore bookmakers. The offshore guys should send New York Gov. Andrew Cuomo a gift fruit basket.

The online gambling law that’s part of the New York budget is murky and unwieldy at best and a unmitigated disaster at its worst.


RELATED: Cuomo doesn't clear up NY mobile sports betting questions


Even legislators who have worked to push online wagering for years are hard-pressed to explain exactly or even approximately how it will eventually work.

In a nutshell, the framework is this: The state gaming commission will pick two operators through a bidding process in which the bidders have to decide how lethal the poison will be that they have to drink. Then, the “operators” each get to pick what appears to be two “skins.” The operators (and maybe the skins, who knows?) have to locate the servers in some existing casino. Maybe (again, who knows), there will be more skins down the road.

For the lucky winning bidders, there’s a $25 million buy-in for a 10-year license and a $5 million, let’s call it server rent, to a hosting casino, presumably in upstate New York.

It’s expected that the tax on the operators will be 50% and maybe higher, depending on how much pain they can tolerate to win a bid.

OK, we know the winners. New Yorkers have already been driving to New Jersey, where healthy competition and a reasonable tax rate has encouraged operators to offer decent odds and juicy promotions.

In return, customers have rewarded Jersey operators with handle that has recently approached nearly $1 billion a month. A fair amount of that handle has been bridge-and-tunnel money from New York.

A Lot of Losers in New York Plan

The losers? Where to begin? How about the tribal gaming operators who appear to be cut out entirely unless one of their casinos gets to be a server host. And then there’s the gambling public that will have meager choices among the operators/skins.

Eventually, New York taxpayers will be casualties because of revenue lost in the absence of a more attractive online sports gambling model. That will become apparent enough when observers look at the monthly balance sheets comparing, say, New Jersey and New York.

New York has more than twice the population of New Jersey and far more pro sports teams that should engender homer money, so there should be an expectation that every month New York’s handle will more than double New Jersey. If New York fails to reach that bar, blame Cuomo’s plan.

Also important is that one of the rationales for legalizing sports wagering is to keep U.S. money in U.S. tax coffers. Money that goes to offshore bookies is not taxed, neither the operators’ revenue nor the gamblers’ winnings.

Crummy Odds, Lesser Promotions

Bad gambling law like the New York sports gambling law will only result in crummy odds and lesser promotions. We know that for a fact. DraftKings has said publicly that it offers fewer promotions in Pennsylvania, where the tax is way north of 30% and squeezes already thin profit margins.

As onerous the tax burden is in Pennsylvania, New York promises to be even worse.

Sure, for a while those lucky N.Y. operators/skins will offer attractive come-on promotions in a flurry of player acquisition frenzy. But once that 50%-plus tax rate wears away at the profit margins and it’s clear that the good four-figure and five-figure customers are sticking with their offshore guys who, by now, are frequently trusted books — or, at minimum, are still going to Jersey — the promos will inevitably tighten.

All this is because Cuomo has dug in his heels on the idea that a lottery-type operation will reap more money for the state. Great. Because we all know what a swell deal lottery customers get every time they buy a scratch-off.

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