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New York State Lawmakers Near Deal On Legalizing Mobile Sports Betting

An agreement 'in principle' could be reached in the next 24-36 hours, sources say

Matt Rybaltowski by Matt Rybaltowski
April 1, 2021
in Regulation
Cuomo April 21

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Hours after New York political leaders missed a midnight deadline on passing a timely fiscal year budget, discussions on legalizing mobile sports betting gained considerable momentum on Thursday afternoon, Sports Handle has learned.

Negotiations between Gov. Andrew Cuomo’s office and the New York Legislature have entered advanced stages, with both sides eager to complete a deal, sources told Sports Handle. A long-awaited deal that could bring mobile sports betting to the Empire State may be reached in principle over the next 24-36 hours, sources indicated. The framework of the deal is premised around a state-run model involving a commercial partnership between the New York Gaming Commission and one or more sportsbook operators.

If mobile sports betting appears in an enacted state budget, it is unclear how many potential operators will be allowed into the marketplace.

The legalization of online sports wagering in New York is arguably the biggest development for the emerging U.S. sports betting industry since the Supreme Court’s historic PASPA decision in May 2018. When Cuomo signaled an intention to include mobile sports in the budget back in January, the three-term governor emphasized that New York could eventually become the largest market for sports betting in the nation.

A spokesperson for Cuomo did not immediately respond to a request from Sports Handle for comment.

Re: status of the state budget talks and whether a deal is near, a legislative source says "very close."

— Nick Reisman (@NickReisman) April 1, 2021

A competitive bidding process

When Cuomo formally outlined an online sports wagering proposal in January, his administration projected that the activity could bring as much as $500 million annually to the state when the market reaches maturity. Over the first year of mobile sports betting, a partial year, it is projected to generate less than $50 million to the state, prior to a step-up to $357 million by Fiscal Year 2023. While Cuomo’s long-term projections have been met with skepticism, the projected revenues would dwarf the proceeds brought in by neighboring New Jersey from 2020 when the Garden State set several national records for sports betting activity on the legal market.

“This is not a money maker for private interests,” Cuomo said in January during his annual State of the Budget address. “We want the actual revenue from the sports betting.”

Under Cuomo’s initial proposal, the Gaming Commission would issue a request for proposals (RFP) to select one or more providers to offer mobile sports wagering in New York.

Although a bevy of heavy hitters are expected to take part in a competitive bidding process, none have publicly indicated how much they are willing to pay through a revenue-sharing agreement. On Wednesday, a source with knowledge of the negotiations told Sports Handle that Cuomo is looking for a percentage of revenue from a partnership similar to one in New Hampshire, which went live with mobile sports betting in December 2019. Under the partnership in the Granite State, DraftKings is paying New Hampshire 51% of its gross gaming revenue (GGR) from its online sports betting channel.

The budget may be winding down, but we’re still pushing for my plan. Multiple skins, the competitive market approach is recognized as the best model around the country.

— J Gary Pretlow (@JGPretlow) April 1, 2021

The actual revenue sharing percentage that goes to New York State may be detailed in the budget or be negotiated as part of the bidding process, the source said.

Currently, DraftKings offers sports betting on a retail-only basis at in the Empire State at Del Lago Resort in Seneca County. FanDuel, DraftKings’ chief rival, operates a retail sportsbook at Tioga Downs in Tioga County. At the moment, it has not been determined how many sportsbooks plan to take part in the bidding process.

“The competition is going to be intense,” a source said.

There is also some concern among tribal leaders that the state’s federally approved Indian gaming operations could be cut out of the deal. A 2013 agreement between the Oneida Indian Nation and New York State created a tribal exclusivity zone that spans 10 central New York counties. As part of the agreement, the Oneida Nation has exclusivity on new online and in-person casino games within the zone.

The Seneca Nation of Indians, meanwhile, reconfirmed the tribe’s exclusivity zone for gaming operations in a separate 2013 deal with the state. It is unclear if the sides can reach a deal where the Oneida Nation and other tribes in New York could opt-in to the state’s sports betting scheme in exchange for waiving the exclusivity zones.

A new wrinkle in NYS mobile sports betting talks for state budget negotiators to resolve, from @SenGriffo: pic.twitter.com/eMoUq36MYC

— Tom Precious (@TomPreciousALB) April 1, 2021

Turning Stone Resort Casino, a resort owned and operated by the Oneida Nation, is located about 35 miles east of Syracuse.

Impact on other states

Although sports betting has been legalized in more than 20 U.S. states, wagering on sports via smartphone is not allowed at the moment in the nation’s four most populous states — California (37.7 million), Texas (27.7 million), Florida (21.5 million), and New York (19.5 million). A study from Bank of America projects that the “total addressable market” for sports betting in the U.S. could reach $15 billion by 2030. The four states could account for roughly $3 billion combined, according to a June 2020 note from Bank of America analyst Shaun Kelley.

As New York moves closer to legalizing sports betting, the pari-mutuel industry in Florida has held recent discussions with Gov. Ron DeSantis on a comprehensive gaming package in the Sunshine State.

Over the last two years, Sen. Joseph Addabbo Jr. has used a traffic analogy to describe New York’s inability to approve mobile sports betting. New York, he joked, has symbolized a car wimping along in the right lane with wobbly wheels, while speeding sports cars such as New Jersey whiz by.

Until the NYS budget negotiations are complete, I will be advocating for mobile sports betting to be included so our residents have a legal, safe way to wager in their own state, while also recognizing increases in revenue, educational funding, addiction programs and jobs.

— SenatorJoeAddabbo (@SenJoeAddabbo) March 28, 2021

“We should have done this two years ago,” Addabbo told Sports Handle on Wednesday. “We should have been New Jersey, we should have been eclipsing Nevada at this point. We are New York, we lead, others follow.

“It’s an odd place for New York to be, we should be out front. I’m not going to go backwards, I’m going to go forward.”

 

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Matt Rybaltowski

Matt Rybaltowski

Matt is a veteran writer with a specific focus on the emerging sports gambling market. During Matt's two decade career in journalism, he has written for the New York Times, Forbes, The Guardian, Reuters and CBSSports.com among others. In his spare time, Matt is an avid reader, a weekend tennis player and a frequent embarrassment to the sport of running. Contact Matt at matt@usbets.com.

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