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New York Online Sports Betting Path Still Uncertain in Cuomo’s Budget

New York Online Sports Betting Path Still Uncertain in Cuomo’s Budget article feature image

Lev Radin/Pacific Press/LightRocket via Getty Images. Pictured: New York Governor Andrew Cuomo.

New York’s governor, lawmakers and gaming industry stakeholders all support legalizing online sports betting. Now they must figure out how to do so.

Gov. Andrew Cuomo again backed online sports wagering Tuesday, this time at a press conference announcing his planned 2022 fiscal year budget, but the ensuing legislative framework (or lack thereof) still concerns legislators and stakeholders.

The initial budget legislation calls for mobile wagering through “a platform provider or providers,” opening the door for the multi-operator model supported by legislators and the industry at large. However, Cuomo’s address announcing the budget again backed lottery control for online sports betting — not state casinos — potentially creating a limited or single-operator model that has long been decried by most other sports betting backers.

Cuomo’s budget projects roughly $500 million in annual online sports betting tax revenue for the state at market maturity, a figure the governor’s office argues is 10 times larger than would be under the multi-operator models operating in neighboring states such as Pennsylvania and New Jersey. The Garden State leads the nation in average handle, nearing $1 billion monthly, but has generated “only” $102 million in tax revenues since it began accepting sports bets in summer 2018.

However, industry advocates say a competitive marketplace that allows several dozen operators would be significantly more lucrative than a single-operator model in New York, which has more than twice as many full-time residents as New Jersey. Multi-operator advocates also note that without the accessibility of all top sportsbook brands, many of which have already invested millions acquiring customers in the New York City metro area, would-be legal customers will continue patronizing offshore sites and unlicensed bookmakers, neither of which pay state taxes.

The contrasting pushes between multi-operator or single-operator frameworks create an irreconcilable contrast that must be settled in one side’s favor before online wagering can begin in what would be the most populated state yet with legal mobile betting.

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Collision Course Set

Cuomo’s budget release outlines the path for sports betting, among a myriad of additional priorities, that the governor will push in the 2021 legislative session. The pending sports betting legislation will have to compete with a pair of bills already advancing through the legislature.

Assemblymember J. Gary Pretlow and Sen. Joseph Addabbo have already advanced identical wagering bills that call for as many as 14 mobile operators as well as retail betting kiosks at off-track betting establishments and professional sports stadiums. Both bills easily passed their respective chamber’s gaming committees, the first step in the long legislative process.

Cuomo’s latest proposal indicates it would only support a handful of online operators at most, though it doesn’t clarify which entities would be eligible. A press statement released earlier this month said bidding would only be open to the four upstate commercial casinos’ existing retail sportsbook partners, which are BetRivers, FanDuel, DraftKings and IGT.

In a separate line item, Cuomo’s budget called for requests for proposals for three unused commercial casino licenses, but any new gaming facility is years from fruition. It’s far too early in that process to believe it would have any impact on the existing sports betting deliberations.

Draft legislation with key details hasn’t been released, but this could set up a bidding war that leads to only one operator. New Hampshire passed similar legislation in 2019 that ultimately created a de facto monopoly when Boston-based DraftKings drastically outbid all other operators by accepting higher tax rates in exchange for exclusive market access.

Further Challenges

Though short on details, Cuomo’s plan could run into logistical hurdles even before it faces the gauntlet of the legislature.

Some legal observers believe a 1984 state attorney general’s opinion invalidates the legality of Cuomo’s plan. Meanwhile, there is no mention in the current plans of horse tracks, Native American casinos or other gaming entities, all parties which could look to thwart a sports betting effort that shuts them out, either through the statehouse or the courts.

Avoids the lottery problem that would lead to a constitutional invalidation under the 1984 Abrams AG opinion, but doesn’t ameliorate the risk of excluded horseracing interests using that opinion as the playbook to invalidate the entire 2013 sports betting law as unconstitutional.

— Daniel Wallach (@WALLACHLEGAL) January 20, 2021

Assuming the legislation is submitted, Cuomo, and whichever lawmakers want to file his bills, have only until April 1 to finalize the FY 2022 budget. The legislation could face an uphill climb if sent to either the Assembly or Senate’s gaming and racing committee, which are chaired by Pretlow and Addabbo, respectively.

Should Como’s proposal make it to the Assembly’s Committee on Codes or the Senate’s Finance Committee it could meet up with the existing multi-operator bills, which are awaiting further action. At that point lawmakers in the committee may be forced to side with legislators or the governor.

Democrats have supermajority control on both chambers of the legislature, meaning divides won’t be along party lines. Instead, divisions will come between those who support the multi-operator vision and, in all political practicality, those unwilling to cross an influential Democrat in the governor’s mansion.

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