New York Governor Andrew Cuomo is finally on board with legalizing mobile sports betting in the Empire State. Cuomo released a statement last Tuesday night that he is willing to move forward with online sports wagering in New York.
The proposal to move ahead comes when the coronavirus pandemic has decimated the New York state budget, which is now facing an estimated $50 billion deficit.
Bill Colleoni of Odds.com wasn’t surprised by the aboutface. “Cuomo is able to justify the change in stance by highlighting that New Yorkers are betting anyway and now that betting is no longer illegal on the federal level, geography, not state law, is the biggest factor. New York needs the funding in a way they couldn’t have anticipated this time last year. Watching those tax dollars go to a neighboring state is not something voters on either side of the sports gambling debate want.”
New Jersey has benefited from New York’s inability to legalize sports betting as close to 20% of its yearly betting handle is from New Yorkers.
Cuomo addressed this head-on and expressed his desire to keep that revenue in house and ease the financial strain faced in the Empire State.
“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 tax revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis,” said Cuomo.
At the end of 2020, Cuomo did hint that he could back online sports betting and marijuana to help fix the state budget, so it looks like mobile wagering will have a realistic shot this year.
Those questioning just how realistic the chances are should look no further than Wall Street, where nearly every publically traded gaming brand’s share value surged following Cuomo’s comments.
New York Already Faces Backlash
About 12 hours after Cuomo was on-board with mobile sports betting, his first proposal was to have sports betting run through the state lottery instead of casinos.
States that choose the lottery system to run sports betting have not seen the same success as states like New Jersey or Pennsylvania. Just ask Washington D.C. bettors how they feel about GameBet DC.
GameBet DC is the District’s lottery run betting app that has seen little success since it launched at the end of May. William Hill launched a retail sportsbook in D.C. and saw its betting handle three to five times higher than what the mobile operator is bringing in per month.
GameBet has created inflated betting lines through its app compared to the standard -110 juice normal sportsbooks offer. If someone uses GameBet, it could see lines set at -118 in comparison.
The issue with this type of model is that it does not bring in healthy competition for the market to grow naturally. Cuomo wants to bring in revenue for the state instead of helping local governments and casinos profit off the industry.
In return, that hurt the overall betting market in the long-term and frustrates sports bettors in those states. New York could see more revenue annually if it allows casinos to run sports betting compared to a single sportsbook run through the Lottery.
Cuomo wants to lean towards that idea, but gaming lawyer Daniel Wallach has reported that New York’s state constitution would now allow for this to happen. If New York wanted to legalize sports betting through the Lottery system, the constitution would need to be amended.
Cuomo and New York lawmakers will begin to discuss what mobile sports betting will look like in the coming months.
Pressure From New Jersey
New Jersey took over as the sports betting leader in the U.S. in 2020, and the Garden State will have to give some thanks to New York sports bettors.
In February, a study done by research firm Eilers & Krejcik estimated that New Yorkers’ bet was $837 million in New Jersey. Roughly 18.9% of New Jersey’s 2019 betting handle came from New York bettors.
Through November 2020, New Jersey hit the $5 billion handle mark with one month left, meaning that New York could have placed over $1 billion in bets in New Jersey last year.
The Garden State is also feeling the pressure from New York moving forward with online sports betting. New Jersey could lose a quarter of its yearly betting handle if New York creates a successful online wagering industry.
New Jersey will see close to $6 billion wagered in its state in 2020, and between 20%-25% will be removed if New York goes live with mobile betting. The state could mature into a modest $4.5 billion to $5 billion betting industry.
Mobile Betting Reality
Sen. Joseph Addabbo has been fighting for online sports betting since the state legalized in-person sports betting in 2019. Addabbo understands that a casino driven betting industry is more lucrative than a lottery driven one.
Cuomo is looking for a quick fix due to the state needing $50 billion by April’s budget due date, and that is why he wants the lottery system.
However, the tribal casinos and racetracks already have sportsbooks operations and will not want to be left out of the mobile betting industry. Also, under the lottery system, Cuomo would choose one sportsbook already operating in the state to take over with the other five are left in the dust.
There are multiple hurdles for Cuomo to get through to use the lottery system for sports betting, and a lot of interests in the industry would also be left out.
New York is on the right path, but it could take longer than usual to finally pass mobile betting.