On Monday morning, 11th Jan, Governor Andrew Cuomo of New York officially disclosed his plans to pursue legal mobile sports betting in the Empire State. His mobile sports betting proposal was part of the annual State of the State address he gave to New Yorkers, showing his readiness to embrace a revenue-generating activity that he had rejected earlier.

Gov. Cuomo’s change in tune comes at a time when the Empire state is facing a $15 billion revenue deficit as a result of the pandemic and per his suggestion, legalization of the activity would give the state’s economic outlook a much-needed shot in the arm. In a press statement he released days before the State of the State address, he touted the state’s incredible potential for online sports wagering and cited the fact that they are losing a lot of revenue to neighboring states and the black market. He said;

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“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.”

True to Cuomo’s word, the Empire State truly has tremendous potential should mobile wagering be okayed. Based on a February 2020 report published by Eilers & Krejcik Gaming, in 2019 residents of New York spent a whopping $837 million in the neighboring New Jersey. This figure makes up for 20% of the Garden State’s annual sports betting handle for the same year.

What Does Gov. Cuomo’s Sports Betting Proposal Look Like?

In Cuomo’s mobile sports betting pitch, the New York Gambling Commission is going to issue a formal RFP, short for request-for-proposal, to select and license one retail sportsbook operator or online platform.  The sports betting service provider in question will be the only authorized entity to offer mobile sports betting in the Empire State and it must be partnered with the state-licensed retail casinos. Moreover, the single sports betting operator or platform will also be required to team up with an organization for protection against problem wagering and abuse.

More importantly, Governor Cuomo’s plan is for mobile sports betting in New York is for the activity to run under the state lottery rather than commercial casinos. Some of the states that have taken the state lottery direction for online sports betting include Washington DC’s GamBet platform which operates alongside William Hill, the only other legal retail brand, and New Hampshire which awarded DraftKings an exclusive contract to run online sports betting in the state. Rhode Island also followed the same direction where the state lottery partnered with William Hill and IGT to operate sports betting.

Robert Mujica, New York’s Budget Director put the governor’s monopolistic system in perspective saying that it could generate half a billion every year whereas a standard competitive sports betting model such as the one adopted by the likes of Nevada and Pennsylvania could instead make the Empire State only about $50 million in tax revenue annually. Cuomo has been very categorical about why he is choosing a state-run mobile sports betting model, and he even clarified his stance in one of the Q&A sessions with the press last week as follows; 

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“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 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.”

New York Lawmakers Have their Counterproposal

Last week on Thursday, two of the most dedicated sponsors of sports betting in the Empire State, Sen. Joe Addabbo Jr. and Assemblyman Gary Pretlow also jointly filed proposals that could shape sports betting in the state. Senate Bill 1183 and Assembly Bill 1257 tabled by Sen Addabbo and Assemb. Pretlow respectively target the amendment of Section 1367 of the racing, pari-mutuel wagering, and breeding law.

Unlike Cuomo’s proposal, however, the two lawmakers are backing the standard competitive approach, giving licensed casinos room to offer mobile sports betting under two different skins. Given that the state currently has three tribal casinos and four commercial casinos in upstate New York, there could potentially be a total of 14 mobile sports betting platforms.

The two jointly filed bills propose a $12 million one-time entry fee and 12% taxation for the gross gaming revenue, which would ultimately generate annual revenue of $79 million, far less than what Cuomo’s plan would bring in for the state.