No gold rush in Cuomo U-turn on New York mobile sports betting

New York State looks set to welcome mobile sports betting with Governor Andrew M Cuomo announcing this week the introduction of legislation to authorize mobile sports wagering as part of the 2021 State of the State.

Under Cuomo’s proposal, the New York State Gaming Commission will issue a request for proposals to select and license a sports operator or platform to offer mobile sports wagering in New York.

This operator or platform must have a partnership with one of the existing licensed commercial casinos. The Commission will also require any entity operating mobile wagering apps include safeguards against abuses and addiction.

Confirming the news, Cuomo stated: “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.

“New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis.”

Prospective operators will, however, have noted the tough tone adopted by Cuomo who is determined to ensure that the state is the outright winner when it comes to apportioning the revenue from sports betting.

“We want to do sports betting the way the state runs the lottery, where the state gets the revenues,” he said. “Many states have done sports betting but they basically allow casinos to run their own gambling operations. That makes a lot of money for casinos. But it makes minimal money for the state. And 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.”

Tasked with explaining the rationale behind the new legislation and Cuomo’s drive to maximize state returns, Robert Mujica, New York State’s Director of the Budget, advised: “So, the narrative out there has been that the state is losing billions of dollars to other states to sports betting. But the reality is that the billions of dollars that are being wagered and the money that’s being made are not being made by the taxing jurisdictions.

New Jersey, for example which is the most commonly used example, in the entire three years of sports betting they collected less than $80m, actually only $45m in 12 months compared to the billions that are being talked about. The reason being everyone else is making a lot of money off of sports betting, the jurisdiction where it’s in the state is not.”

He continued: “There are a few states that have done it a different way, where the state contracts with the private sector who runs the sports books, but the state ends up getting the majority of what is left over after everything is returned to the betters. So, the difference between the two estimates would be between the state making somewhere in the neighborhood of $50m a year versus $500m a year.

“So, the way the Governor’s proposing it and we’ll advance it is so that the state can get up to $500m a year instead of $50m, and that money would then go to the state budget. Otherwise, for the bettors it’s seamless and it’s exactly the same. The only difference is the state gets the money versus others. That’s the proposal, which you’ll see when the Governor puts out his Executive Budget.”

Analysis:

New York’s volte face on mobile wagering, while inevitable, has been a long time in the making and undoubtedly at significant cost to the state. The Governor, and Mujica, might well pontificate over how other states run their business, but that doesn’t change the fact that New York has been hemorrhaging millions of dollars while bettors headed to New Jersey to place their daily wagers.

As for Cuomo’s ambitions to launch a lottery-run mobile sports betting market, that has already been picked apart by sharp-eyed legal expert Daniel Wallach who pointed out this week that to do so would need an amendment to the State Constitution. We can also expect to see resistance from tribal gaming interests who will want in on the action and Joseph Addabbo and J Gary Pretlow who would favor a market driven by several operators.

While New York has massive potential to be one of the biggest sports betting markets in the US, some might say that Cuomo runs a very real risk of snatching defeat from the jaws of victory.

Latest posts