Despite Optimism, NY Mobile Sports Betting Has Long Way to Go

Despite Optimism, NY Mobile Sports Betting Has Long Way to Go
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New York sports betting enthusiasts got a New Year’s gift from Gov. Andrew Cuomo as he elaborated over the last few days on a brief comment he made back in December that signaled a lifting of his previously dark view of online sports gambling. Almost in passing last month, Cuomo mentioned online sports gambling as a way to deal with the state’s budget problems.

Once seemingly intractable on the subject of mobile sports wagering and determined to throw up roadblocks, current state budget realities have caused Cuomo to now openly support such betting as a vehicle for helping cope with the economic havoc wrought by the COVID-19 pandemic.


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However, the road to online sports wagering in New York is likely to still be a rocky one. To be clear, the state already has limited sports gambling. There are retail sportsbooks in New York’s upstate casinos, both commercial and Native American casinos. But with such limited sports gambling, operator revenues have been meager and, consequently, so has the tax payoff.

By now, the lesson is obvious — the money is in online.

Cuomo over the last couple of days has tried to establish the trajectory for what he favors in online sports gambling. The latest is that the governor wants the State Gaming Commission to begin the process of taking bids from online sports gambling operators to do business in New York, also saying that such an “operator or platform must have a partnership with one of the existing licensed commercial casinos,” according to a statement from Cuomo’s office.

What exactly that means remains to be seen. Is Cuomo talking about a single operator or will the state allow multiple operators?

With neighboring to New Jersey setting a record of more than $931 million in sports betting handle in November — and an estimated 20 percent of it coming from New Yorkers — Cuomo noted the obvious: "At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets."

Welcome to Earth, governor.

New York Far Behind on Online Sports Betting

So, New York is now playing catch-up, a position it finds itself in, in large part, because of Cuomo’s moralistic foot-dragging. OK, that’s in the past. What now?

Cuomo added the equally obvious observation that New York has the “potential to be the largest sports wagering market in the United States.” (That is until California, Texas or Florida get with the program; none of the three most populous U.S. states has online sports gambling).

So, yes, as Cuomo points out, New York — as the fourth most populous state — would be a windfall market for sports betting operators. Unless New York fumbles online sports wagering entirely, it probably averages more than a billion dollars a month in handle.

Some New York legislators have been working on online gambling plans for years so it’s not as if lawmakers there are starting from scratch. Key issues such as tax rates (12% seems to be a starting-point number) have been pondered but still have to resolved. The legislature will have a lot to say in determining what the market will look like.

Cuomo Being Cuomo

But Cuomo was still being Cuomo on gambling and raised some eyebrows with the following during a news conference Wednesday: “We want to do sports betting the way the state runs the lottery. Where the state gets the revenues. Many states have done sports betting but they basically allow casinos to run their own gambling operations. That makes a lot of money for the casinos but makes minimal money for the state. I’m not here to make casinos a lot of money. I’m here to raise funds for the state. So we have a different model for sports betting.”

Uh, huh. The District of Columbia has a “different model” for online sports betting. It’s called horrible. There, the D.C. Lottery has partnered with an operator to offer truly pathetic betting odds that have attracted truly pathetic handle and minimal benefit to taxpayers. States with lottery-run, single-source sports betting platforms have had issues, none of them good.

Cuomo wasn’t specific about what he means by “different,” and that might simply be political rhetoric to make the point that online wagering will happen in New York for the benefit of the state’s residents and not for greedy gambling operators. Fine. But the reality is policies that allow gambling operators to offer an attractive product are what drive sports wagering businesses that work for everyone: Consumers, operators and government, meaning taxpayers.

Process Just Getting Started

In New York, there’s a lot of work to be done and also a lot of moving parts.

There are the interests of both commercial and Native American casinos to be considered. There’s the question of how many online operators will be allowed to partner with each casino. There may be discussion regarding stand-alone online operators who don’t partner with casinos.

There’s the matter of online versus in-person account registration for customers. How about whether promotional expenses will be allowed to be deducted from gross gaming revenues for taxing purposes? Will betting be prohibited on in-state colleges? There are a slew of details and it’s hard to imagine that it can get done until sometime in 2022.

Having said all that, the gaming industry is mostly delighted to see New York coming in from the cold on online sports gambling despite the fact that there will be adverse handle impacts in adjoining markets, principally for New Jersey and even a bit for Pennsylvania, states which have benefitted from New York being on the online gambling sideline.

“I’m absolutely delighted to see the support from Gov Cuomo. Legalizing sports betting has the potential to bring leaking tax dollars back to New York from offshore books and nearby states,” Adam Greenblatt, BetMGM CEO, said in a statement. “We’re eagerly awaiting next steps and have every intention of working closely with regulators in New York.”

The business about “eagerly awaiting next steps”, as the BetMGM CEO put it, let’s put it this way — that’s a big club now.

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