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Cuomo Doubles Down on Limited-Operator Sports Betting Model

Cuomo Doubles Down on Limited-Operator Sports Betting Model article feature image

Brendan McDermid-Pool/Getty Images. Pictured: Andrew Cuomo

New York Gov. Andrew Cuomo reiterated plans for a direct, government-bid sports betting model Monday, the clearest indicator yet the governor has not backed down from a statewide wagering vision not shared by lawmakers in his own party.

“We’ll contract with them and we’ll make the money,” Cuomo said about his mobile sports betting plans at a Monday press conference. “We don’t need the casinos as a middleman.”

New York elected officials had reportedly made substantial progress on the state’s $200 billion fiscal year budget, but it was unclear as of Monday afternoon how — or if — mobile sports betting would be included in final deliberations. Lawmakers had been working for months on a vastly different, competitive-market model supported by the legislature’s leading Democrats and much of the gaming industry overall.

Though deals have not been finalized, Cuomo’s Monday reaffirmation for his preferred model during a media phone conference is the latest sign his version will ultimately prevail in ongoing sports betting negotiations as part of the larger state budget.

Along with the competing visions, here are the major issues standing in the way and what to expect next from what would be the nation’s largest sports betting market:

Key Issues for New York Online Sports Betting

Though Democrats control both chambers of the legislature and the governor’s mansion, lawmakers and Gov. Andrew Cuomo have not finalized core components of what is projected to be the nation’s largest single-state budget. Policymakers were still finalizing key details Monday afternoon, several days after the state missed its April 1 budget deadline.

Taxes: Officials had settled arguably the most important FY 2022 roadblock Monday afternoon.

According to the Wall Street Journal and other outlets, lawmakers and Cuomo had agreed to raise income and corporate taxes by $4.3 billion, largely by increasing taxes on New York’s wealthiest earners. Cuomo had resisted the tax increase, especially after federal government funding covered most of the state’s initial $15 billion projected budget shortfall, but Democratic lawmakers pushed for the tax increases to fund more government programs.

As of Monday afternoon, lawmakers had apparently won the budgetary tug-of-war, clearing the way for further negotiations.

Sports Betting Structure: With taxes seemingly resolved, officials could turn to less financially significant but politically divisive issues such as online sports betting.

Since Cuomo unexpectedly endorsed mobile sports wagering in January, legislators and the governor have fought over the chief executive’s preferred single or limited-operator proposal and lawmakers’ preferred competitive, multi-operator model. Though both the Assembly and Senate approved the competitive model, which would grant four upstate commercial casinos and three Native American gaming tribes two online licenses apiece.

Under Cuomo’s initial outline released earlier this year, the four commercial casino retail sportsbook partners (DraftKings, FanDuel, BetRivers and bet365) would bid for one or one of a limited number of online licenses, creating a de facto monopoly or oligopoly. It wasn’t clear how or if gaming tribes would be eligible for sports betting licenses, but Cuomo said Monday, without offering specific details, they would not be excluded from the process.

Under lawmakers’ plans, these sportsbooks as well as others with preexisting “second-skin” operators such as PointsBet and Penn National’s Barstool sports, would be permitted licenses without having to bid for such rights directly with the government. Legislators’ plans would also open the door for deals struck by tribal nations, which include Caesars-owned William Hill.

These incompatible visions have stalled online sports betting legalization for months. Legal analysts believe Cuomo’s model could also violate existing law and also draw legal challenges from parties left out of the bidding process, creating more possible roadblocks even if included in the budget.

Tribal Gaming: Cuomo’s plan would seemingly exclude the three tribal gaming nations, not just limiting potential operators but jeopardizing the entire online sports betting legalization process and costing the state millions in lost revenues and possible legal fees.

The Syracuse Post-Standard reports the Oneida Nation could suspend its annual slot revenue payments if excluded from mobile wagering. The Seneca and Akwesasne Mohawk tribes, the state’s other two Native American retail sportsbook operators, would likely also seek some sort of recourse if excluded.

The Oneidas argue Cuomo’s plans would violate a 2013 gaming exclusivity agreement that was settled in response to the creation of the new upstate commercial casinos. The Oneidas could, in theory, have exclusive online sports wagering rights to the 10-county gaming area granted under the previous deal, but that would limit a huge chunk of central New York bettors to only one operator.

The tribe would reportedly agree to waive this exclusive gaming territorial right if permitted to open one or more statewide mobile sportsbooks as proposed in lawmakers’ plans. But if Cuomo doesn’t budge, this could create a whole new political, logistical and legal front for online sports betting.

Cuomo said his plan would not run afoul of any tribal agreements and that the administration wanted the Oneida’s participation in mobile sports betting, though didn’t give further specifics. He laughed off this assertion it could cost the state money or jeopardize existing deals at Monday’s media conference.

“Is that with the legislator said, that I want to cost Oneida County $20 million a year,” Cuomo said in response to a reporter’s question Monday. “Why, how arbitrary and capricious that video of me.”

Downstate Casinos: The Senate’s budget would expedite licenses for three downstate casinos, which could theoretically bring six more online licenses into the fold by the end of the calendar year. The Assembly budget does not include the provision, creating another political online sports betting obstacle.

If the downstate casino licenses were included in the FY22 budget, that could allow major players such as Yonkers Racetrack operator MGM, which bought the property in large part to gain an iGaming foothold for its BetMGM app, to quickly enter the nascent New York online sports betting market. Yonkers and other downstate racetrack operators that already offer some sort of casino-style games, such as Resorts World New York City at the Aqueduct Racetrack complex, would have a leg up on earning one of the three downstate casino licenses.

The new facilities’ inclusions create their own political problems. The same 2014 ballot measure that created the four upstate casinos included a 10-year delay for the three downstate casinos, ostensibly to give the upstate facilities in less-populated portions of the state a competitive head start. The divide in the Assembly and Senate’s budget proposals, in a year where leaders from both chambers said their budget priorities were more aligned than ever, underscores the political difficulties of such a move.

Cuomo did not mention the downstate casinos Monday.

What Comes Next

Sen. Joseph Addabbo, the Senate’s leading competitive model advocate, told The Action Network and other outlets last week he believed his preferred model’s odds were “50/50.” Those odds seem to be bullish following Cuomo’s press conference Monday.

If elected officials can’t reach an agreement and legal wagering is not included in the budget, lawmakers have until the 2021 session’s June adjournment to work on a standalone sports betting bill. Officials removed recreational marijuana legalization, another FY 2022 priority, from the budget to pass a separate implementation bill.

Addabbo and other sports betting backers are less optimistic they could do the same for mobile sports betting. The budget’s sheer size allows something comparatively financially inconsequential such as sports betting, which by Cuomo’s own estimate would generate $500 million in annual tax revenues at maturity or roughly 0.25 percent of this year’s budget, to pass without the scrutiny of a solitary proposal.

New York’s top officials have reportedly near the final stages of the most anticipated sports betting development since the Supreme Court struck down the federal wagering ban nearly three years ago. There’s still no definitive sign yet how, when or if mobile betting comes to New York, but Monday’s developments indicate the likeliest version is one opposed by much of the gaming industry at large.

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