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New York Finally Kicks Off Regulated Mobile Sports Betting
By Jeff Osienya Jan 09, 2022 IndustryNew Yorkers can now enjoy sports betting on the go after the state debuted its regulated mobile sports betting market on January 8th. Upon market maturity, the Empire State is projected to win up to $500 million annually from the activity.January 8th marked a significant moment in New York as four sportsbook operators were approved to start offering mobile sports betting by the New York State Gaming Commission. This means that both online and in-person sports betting (which began in 2019) are finally legal in New York. Like retail sports betting, bettors over the age of 21 years can now place wagers on all their favorite New York professional sports teams on mobile. In-state collegiate teams, which the Empire State regulators have always prohibited for in-person sports betting, are also a no-go-zone for mobile sports wagering.
After an intensive vetting process, Caesars Sportsbook, FanDuel, Rush Street Interactive (through BetRivers), and DraftKings were the first operators to be licensed in The Empire State. They all met the regulator’s requirements and were allowed to start accepting wagers from sports activities ahead of the final game of the NFL’s regular season and the Super Bowl in February.
On launch day, Caesars Digital co-president Chris Holdren said:
Quote“Today is a historic day for not only Caesars Sportsbook, but for the entire state of New York. We’re ready to treat sports fans across the state of New York like royalty through our Caesars Sportsbook app as we welcome them into the Caesars Empire, extend our already established roots, and continue to build partnerships that benefit our bettors.”
Johnny Avello, DraftKings’ director of race and sportsbook operations, also chimed in to say:
Quote“Growing up in New York and having spent the last 30-plus years in Las Vegas, I am thrilled that my worlds are finally set to collide. Millions of New Yorkers will soon discover what we believe makes our DraftKings Sportsbook the very best in customer service and real-money gaming and entertainment.”
Five more sportsbooks are expected to launch later in the year, contingent on their ability to fulfill a set of regulatory conditions before receiving approval. The five are Bally Bet, WynnBet, Empire Resorts, PointsBet, and BetMGM, and once they meet the requirements, they will join the rest to bring the total of legal sportsbooks to 9. To attract players to their platforms, the mobile sportsbook quintet is offering some generous sign-up bonuses in the form of risk-free bets and free betting credits.
More States Are Legalizing Sports Betting
Until 2018 when the US Supreme court repealed the PASPA, sports betting unconstitutional had been banned in most parts of the country. This gave states the green light to decide exactly what they could do to regulate sports betting. So far, about half of the 50 states have legalized in-person sports betting, with a majority also allowing online and mobile sports betting later on.
Of course, the main incentive for lawmakers has been to keep the tax revenue within the state. That’s because sports betting fans have been willing to travel to cross borders to bet on sports and wager in other states, hence depriving their home states of the right to claim any gambling revenue.
California and Texas are among more states seeking to legalize mobile sports betting through referendums set for late 2022 and early 2023, respectively. California sportsbooks and tribal casino operators have already reported a willingness to spend over $200 million in campaigns to persuade voters to support their proposals. So, it is no surprise that big names in the sportsbooks list were the first to be involved in the process as they have had success operating in other states.
DraftKings co-founder and North America President Matt Kalish told CNBC in an interview:
Quote“Every state is considering legalizing sportsbooks like DraftKings. It’s a tremendously popular issue. In some recent referendums, like in Maryland or Louisiana, over 70% of votes supported legalized sports betting. It’s a good way to raise tax revenue, create jobs in the state, and fund projects that are important.”
Kynikos Associates founder Jim Chanos has had some negative sentiments about DraftKings’ ability to stay afloat due to their current business model and New York’s stringent tax laws. Nonetheless, DraftKings CEO Jason Robins expressed confidence that his company is playing the long game and business will definitely pick in two to three years – something that the Nasdaq-listed sports betting giant experienced in New Jersey.
Nudged into Action by the Coronavirus Pandemic
US states have had the chance to legalize sports betting since 2018 after the PASPA repeal. Interestingly, however, it was not until 2021 that lawmakers and bookmakers realized the benefits regulated licenses for online and mobile sports betting would bring to the table. As a result, a record number of brick-and-mortar operators suffered great losses following Covid-19 restrictions, effectively backing most US states into a corner due to revenue deficits.
After lawmakers and then Governor Andrew Cuomo okayed regulated mobile sports betting in the April 2021 the state budget, New York became the largest state in the US to permit the activity. However, the 51% tax on revenue generated from gambling activities creates a hurdle that operators will have to overcome to enjoy a desired level of profitability. Still, the income from sports betting is expected to tremendously increase gambling revenue in the state in the coming years.
Market analysts projected that upon maturity, the sports betting market in New York would be generating nearly $500 for state coffers annually. Under the Empire State’s law, 80% of sports betting income will be directed towards two main endeavors – elementary and secondary school education and property tax relief.
Additionally, the state has also earmarked 1% of the garnered revenue for treating problem gambling and gambling harm education programs for the first year of operation. The problem gambling treatment and education program portion of the income has been set at a fixed amount of $6 million in subsequent years. Meanwhile, another 1% of the collected revenue will be directed towards grants for underserved youths for the first year. The contribution will then be fixed at $5 million annually after the first year.
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