New York Legalizes Online Sports Wagering but With Many Questions Left to Answer
- Gov. Cuomo included several controversial laws within the online wagering proposal for NY
- Analysts fear the market will be “uncompetitive” with NY Lottery named for operations
- The current issue with Oneida Indian Nation must be resolved to avoid potential legal action
Wise and experienced sports bettors in New York are carefully rejoicing today, having learned on Tuesday that Governor Andrew Cuomo has finally approved mobile wagering for their state. But through much ongoing publicity, they know the rules involving legislation will come with a few controversial asterisks and serious questions left to answer.
Pushed by a growing $59 billion dollar revenue shortage in the fiscal New York budget, Gov. Cuomo has looked toward expanding sports betting as one of the rescue measures to help the state recover. It was announced that lawmakers and the governor have reached a tentative agreement to legalized mobile betting.
We’ll do it “My Way”
The result did not come easy as Cuomo rigidly fought against mobile wagering for over three years. All sides involved knew if the governor offered a conclusive settlement it would paraphrase a favorite Frank Sinatra tune, doing it “My Way”. Although all information has not been officially published, Cuomo shared a few details of how his plan will work in the initial stages.
Like a grueling heavyweight boxing fight, Tuesday’s deciding legislative session lasted over 11 hours and did not end until 4:00 AM. The intention like many other US states targeting online sports wagering for the start of the NFL and NCAA football season, although not officially confirmed.
Governor Cuomo has remained firm to his pledge to have the New York Lottery, run by the state government to be in charge of operations. Under his plan, the lottery would issue limited requests for proposals (RFP’s) for only a select number of mobile wagering operators. They would include the traditional sportsbook forces led by DraftKings Sportsbook, FanDuel, BetMGM, BetRivers, and other national brands. Those carefully selected would license out to other sportsbook operators, also known as “skins”.
According to State Senator Joseph Addabbo Jr., a major force driving the online wagering issue, the number of skins could reach eight to twenty but as agreed upon will be no less than four.
Cuomo commented on this procedure saying:
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. So, we have a different model for sports betting.
Cuomo selecting the New York Lottery to run operations is but one of the many controversial issues and choices in the online sports wagering decision pegged by lawmakers. Many cite its questionable constitutionality and more concerning the opportunity to allow for competition. A likely reason why most other successful online gaming states including New Jersey, Pennsylvania, and Colorado have opted for casino operators to legally handle operations.
Another questionable issue is New York deciding upon an extremely high 50% of all profits to be shared with the state, leaving operators in a precarious revenue position.
By the Numbers
A key factor in Governor Cuomo making this decision is estimating mobile wagering can generate another $500 million in annual revenue. If correct, that number would place the Empire State number one in the nation within that category. Much of that figure, Cuomo says is reclaiming from bordering New Jersey.
Legalizing online wagering is one of the major contributors counted upon by the governor’s office to help close the massive budget gap. The money will be necessary as included in the budget among major protections to help individuals and business recover from COVID-19 include $29.5 billion for schools, $2.4 billion for renters and homeowners, $29 billion aimed for green investments, $2.4 billion in childcare aid and $1 billion targeted for small businesses.
Friction With Native American Tribes
As anticipated, under Gov. Cuomo’s plan New York Native American tribes will encounter a significant change within their current wagering arrangement with the state. Specifically, centered upon the Oneida Native American Indian Nation, who have voiced their opposition and are strongly considering legal action.
While Gov. Cuomo and his task force have claimed to offer a compromise allowing them to take part in online wagering and share revenue, the Oneida Indian Nation disagrees. Should this dispute continue, excluding the tribe within their ten-county region in Central New York State, the Oneida tribe along with business leaders in the area estimate they could lose up to $70 million in annual settlement payment.
Who Ultimately Pays the Price
The most serious unanswered question is one involving the customer themselves. That is, the New York sports bettor. With a huge percentage chunk of revenue going to the state, a small number of non-competitive operators making a marginal profit while answering to a government agency, somebody will have to pay the price.
Wagering experts wonder if sharp New York handicappers will recognize the outcome being unfavorable wagering lines with better options to select. Either in nearby New Jersey or worse, the very omnipresent offshore sports wagering market that legalized US wagering was designed to defeat.
While Governor Cuomo will be making personal headlines himself during the balance of 2021, many of these lingering questions are destined to be answered.
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Larry Gibbs is both a seasoned journalist and a respected online gaming industry consultant. His wry commentary & sharp analysis have appeared in numerous top gaming and sports wagering publications. He has also served as Vice President of US Gaming Services, a marketing research organization with 15 years of experience in US online wagering. He has spoken at noted gaming industry conferences including G2E, GiGSE, and NCLGS.
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