Cuomo Hints at New York Online Sports Betting, But Hopes Could Still Rest with D.C.

The future of New York online sports betting may not lie in Albany, but Washington, D.C.

Gov. Andrew Cuomo tantalized the gaming industry Wednesday when he mentioned sports betting among possible solutions to the state’s projected $15 billion budget shortfall. The brief, off-hand comment was still his closest embrace for legal online wagering in New York from the man who has, perhaps more than anyone else, stood in its way.

If Cuomo is warming to statewide mobile betting, even its most bullish supporters acknowledge it would be just a tiny fix for the massive budget hole. Instead, Cuomo has focused his attentions on federal support from Congress, one of the few possible lifelines that could save New York’s finances without major spending cuts or tax increases.

Until — or more critically if — Washington channels state-level funds, New York sports betting is still an afterthought. However, the latest signs from Capitol Hill indicate New York may not have many other options.

D.C. Stalemate Could Compel New York Action

Despite Cuomo’s pleading, congressional relief for state budgets seems like it won’t pass as part of a sweeping set of proposals that could, among other areas, fund the federal government, extend unemployment benefits and pay citizens directly with another wave of checks.

Though top Democrats, including New York’s Chuck Schumer, the Senate Minority Leader, have pushed for state funding, Republicans have opposed extra support for state and local governments. Republicans instead have fought for expanded COVID-19 liability protections for businesses, a non-starter for Democrats.

To compromise, reports indicate Republicans will drop the liability protections if Democrats drop the state funding. This could be good news for millions of Americans that could see much-needed money in their pockets, but bad news for state-level lawmakers, many of whom are required by their respective constitutions to balance their states’ budgets.

Without federal funds, New York’s already brutal budgeting process gets that much more difficult. A Couple hundred million from statewide mobile wagering may not be much in a roughly $200 billion budget, but even hold-outs such as Cuomo may have no choice but to take hereto unthinkable steps to generate new revenues.

New York Betting Background

Now in his third term as governor, Cuomo is the most influential state Democrat over a legislature that will have Democratic supermajorities in both chambers beginning with the 2021 session.

His reluctance to pursue statewide mobile sports betting has effectively compelled lawmakers to invest precious political capital in initiatives more likely to draw the governor’s signature, but its still surprising after Cuomo took on a far more aggressive commercial gaming expansion a few years earlier.

Facing a separate gaping budget deficit in the lingering aftermath of the Great Recession, Cuomo pushed for a constitutional amendment in 2014 that would allow four upstate commercial casinos (and for all four to open sportsbooks should the federal sports betting ban in place at the time be lifted).

Voters approved the casinos easily, and all four (plus the state’s Native American casinos) were able to open sportsbooks after the Supreme Court struck down the federal wagering ban in May 2018.

Though New York was one of the first states to accept legal bets, and still the most populated state to do so, it’s sports betting revenues have been a fraction of the booming national market. With bettors only able to wager in-person at the casinos, most of which are in rural, remote regions of the state hours from the New York City metro area, New York sports betting has generated only about $14 million in total betting revenue since wagering began in July 2019.

New Jersey generated $50 million in betting revenues in November 2020 alone, an estimated 25 percent of which came from New Yorkers.

Instead of a competitive, statewide mobile option that would almost instantly make New York sports betting a multimillion-dollar enterprise, Cuomo has been content with the slow trickle of a handful of retail sportsbooks.

Dismissing it as a “rounding error” a few years ago (in better financial times before the COVID-19 pandemic), Cuomo has also said online sports betting would require its own constitutional amendment, a logistical and political hurdle that has helped squash its progress in Albany. Some critics also fear it opens another possible lawsuit in a state that has already battled daily fantasy operators DraftKings and Manhattan-based FanDuel in court for years.

Mobile sports betting backers in the legislature have dismissed the legal need for a constitutional amendment, a position reaffirmed by multiple gaming industry legal experts. Cuomo’s acknowledgement earlier this week has been interpreted by some that he may be warming up to that legal position as well.

A possible lawsuit looms if politicians were to pursue sports betting without the explicit language of the state constitution, but it’s a small concern for its biggest proponents.

Possible Next Steps

Assembly Member J. Gary Pretlow is arguably the biggest proponent of them all. A relentless cheerleader for gaming, and especially sports betting since the Supreme Court’s ruling on the federal ban, Pretlow has sponsored – and championed – legal betting legislation despite the seemingly entrenched recalcitrance from his fellow Democrats.

Following Cuomo’s recent comments, Pretlow told the Action Network it was a promising step in the right direction. The biggest Assembly backer of failed sports betting efforts each of the last three years, Pretlow said another chance could come as part of a possible revenue bill that will need to be in place by early next week.

If that fails, lawmakers will have to start over (again) when the 2021 session begins in January. In the statehouse, sports betting will have to fight in the gauntlet of budgetary negotiations, a grueling, frenetic endeavor in Albany in even the best of financial times. By law, the budget must be submitted by April, giving sports betting backers a small window to finally legalize mobile wagering.

The governor’s support could go a long way toward that possibility. Though Cuomo, not surprisingly, would look first to the far greater potential of federal financial aid, it appears increasingly likely he and his fellow elected officials will have to turn internally to solve their $15 billion problem.

Few things are politically less popular than tax increases or spending cuts, both of which are on the table as New York looks to take on a Gordian knot of a budget. Legal online sports betting, on which New Yorkers already wager billions annually through offshore sites, illegal bookies or other states, all without a cent going back to New York, could be one minor part of that solution.

By all indicators, that possibility will come down to decisions in Washington D.C. Assuming they don’t go New York’s way, it likely comes down to Cuomo.

At least, as Pretlow said Wednesday, it’s on the governor’s mind.