When mobile sports betting (placing bets through electronic devices) comes to New York, Governor Andrew Cuomo wants it to be run like the state lottery.
That is, it would be run by the state, or at least a single state-selected vendor, not competitive companies.
And that, say many mobile sports betting supporters, could be a mistake. And there could be a showdown with state lawmakers currently considering bills that envision a competitive multi-vendor model.
Is there a difference?
“It’s early days but the data we have is that the lottery / monopoly model is underperforming (in terms of revenue) when compared to highly competitive markets,” said Chris Grove, managing director of Eilers & Krejcik Gaming, one on the gambling industry specialized national research company. “It’s lagging behind in terms of sales and handling (the amount of money wagered).”
However, Cuomo chose mobile betting precisely because he sees it as a source of income for the state.
“The question is not whether or not we offer mobile sports betting,” Cuomo said as he released details of his proposal for the 2021-22 state budget this week. “The question is more how and who makes the profit. It’s very lucrative. “
Cuomo’s team estimates that mobile sports betting could generate $ 500 million in annual revenue, and he believes government scrutiny would ensure more of that money goes to the state, which is currently running a $ 15 billion deficit .
“I believe the people of the state should get the revenue,” Cuomo said. “This is not a moneymaker for private interests just to generate more tax revenue. We want the real income from sports betting. “
Cuomo’s support for some form of mobile sports betting represents a change from previous years when he argued that online betting would require a constitutional change.
Cuomo signed into law in 2019 that introduced sports betting in New York, but only for bets made on the physical premises of the state’s four licensed Upstate casinos. (That also opened the door to physical sports books run by the state’s Indian nations).
While gaming proponents welcomed Cuomo’s change of heart on mobile betting, they question his support for a government model.
“I think we all agree that we have to maximize income for the state while stabilizing the economic situation in the state casinos,” said Jeff Gural, who owns Tioga Downs near Binghamton, one of the four commercial casinos Sports betting is legal. “But I think the competitive market is the best way to maximize the revenue we can get. I don’t think the lottery model would work. “
Gural believes there is still time to convince Cuomo to join the competitive model. The new state budget has to be approved by April 1st.
“I think we can discuss this with the governor and argue that the competition is helping everyone,” said Gural, who also owns the Vernon Downs Circuit / Casino in Oneida County, which offers horse racing but no other sports betting. “That way we can all be successful together.”
In the meantime, the bills introduced in the State Assembly and Senate this year call for competition. These bills allow for up to 14 sports betting app providers – two in each of the four commercial casinos and two for each of the three Indian nations that operate sports betting.
“I look forward to working with the governor and his office to make mobile sports betting efficient for the people of New York,” said Senator Jospeh P. Addabbo, the Queens Democrat who chairs the Senate Games Committee and its bill sponsored. He’s been pushing Cuomo to endorse online betting for several years.
He said the multi-vendor approach could be extended to stadiums, arenas and other vendors, “is a far better product” that could generate more revenue and more jobs in the games industry.
Rep. Jeff Gallahan, a newly elected Republican whose Finger Lakes district includes the del Lago Resort & Casino near Waterloo, said he (and the casino’s operators) prefer the competitive model, according to a report on legalsportsreport.com.
“You (del Lago) are thrilled that this bill has been tabled because it is much better than what you saw from the governor and I couldn’t agree more,” said Gallahan.
In the current sports betting model in New York, each of the four commercial casinos has teamed up with a different private provider to operate its sports betting. Tioga Downs has partnered with fantasy sports operator FanDuel, while de Lago has partnered with another fantasy sports company, DraftKings. Resorts World Catskills near Monticello in Sullivan County works with bet365, while Rivers Casino & Resort in downtown Schenectady works with in-house company Rush Street Gaming.
Sports betting is also available at the three Oneida Indian Nation casinos in Central New York, where the partner is Caesar’s Entertainment. The three casinos operated by Seneca Nation of Indians in western New York and the Akwesasne Mohawk Casino near Hogansburg in northern New York also host sports betting.
The Oneidas have raised concerns about legalizing mobile sports betting. The treaties under which the Indian nations operate guarantee them “exclusivity” in gaming in certain geographic areas of the state that could be compromised by online betting, they say. However, the compact ones also allow the tribal casinos to play any form of game that is allowed in the commercial (non-tribal) casinos.
Different states use different models for online betting, said Grove of Eilers & Kejcik Gaming. Smaller states like New Hampshire and Rhode Island tend to use the single-vendor / monopoly model, while large states have competitive locations.
New York’s neighbor, New Jersey, which has become one of the largest sports betting markets in the country, has at least 19 different online sports bets, according to playny.com. The company has set records for revenue and taxes with its sports betting, with a large part of the “handle” coming from mobile betting.
In New Hampshire, which legalized mobile sports betting last year, DraftKings gained a monopoly on operating online betting. It pays the state 51% of its income.
The revenue issue has “a lot of moving parts,” Grove said. For example, a small state might have fewer bets (or settlements) but might try to offset this with a higher tax rate, he said. A larger state may be able to set a lower tax rate but offset this with a higher tax rate.
New Jersey had a total of $ 6 billion in sports betting in 2020, but many observers argue that much of that came from New Yorkers. Analysis on legalsportsreport.com estimates that New York will need to generate $ 20 billion annually to meet Cuomo’s $ 500 million revenue forecast for the state.
In addition to the tax revenue that states can claim on wagering, the other major source of income is the sale of licenses, Grove said. A large state like New York could get up to $ 30 million per license, he said.
The bills, currently under New York State law, provide for a license fee of $ 12 million and a tax rate of 12% for mobile sports betting (compared to 8.5% for casino betting).
Another problem is ensuring that the legal sports betting system passed by the state is attractive enough to “drain” the existing illegal market, Grove said.
“These are all new revenue for the state,” he said. “The question is how do you do it so that the value for the state is optimized and maximized.”
More coverage of casinos and games in New York
Don Cazentre writes about Upstate NY Casinos for NYup.com, syracuse.com and The Post-Standard. Reach out to him at [email protected] or follow him on NYup.com, on Twitter, or on Facebook.