The mobile NY sports betting language included in the state budget bill is best consumed with a stiff drink in hand.
At best, the cocktail might help to make sense of the most confusing bill in three years of legal US sports betting. At worst, a libation will make it easier to walk away from reading the jumbled mess feeling no guilt over lost time.
Gov. Andrew Cuomo clearly won his power struggle with state legislators over how to operate mobile sports betting in New York. The legislative text revealed Tuesday evening sets out to create a state-run monopoly nearly identical to the one pitched by Cuomo in January.
The serpentine path it proposes to travel there, however, evokes memories of watching a drunk friend weave dangerously along the sidewalk after a night of revelry.
Details of mobile NY sports betting plan
In raw form, the bill directs the New York State Gaming Commission (NYGC) to employ a competitive bidding process to select two platform providers to operate at least four mobile sports betting skins. The commission could add more platform providers later, at its discretion.
(Wait, how are a platform provider and a mobile sports betting operator different? Would a provider select an operator? Please consult your attorney or your psychic rather than read the gobbledygook definitions in the bill. Let’s just keep going …)
The two providers both would pay a one-time $25 million fee for a 10-year license. They also would owe a $5 million annual payment to whichever casino houses its mobile betting servers. The tax rate (or revenue share, as it is known in other lottery-run states) would be defined via the competitive bidding process.
For comparison, DraftKings won the New Hampshire process on which this is modeled with a 51% revenue share bid. In exchange, DraftKings became the state’s lone provider.
NY sports betting bid process based on …?
The New York bid process would start by July 1, 2021 and allow 30 days for proposal submissions.
The NYGC then would have up to 150 days to rank the proposals on a scoring system that does not exist yet, except for a provision awarding extra points to operators who partner with tribal casinos. The bill lists subjective qualifying factors including plans to capture offshore bettors and marketing strategy.
(In short, operators would bid blindly against each other to offer the greatest bounty to Cuomo for the privilege of running a New York sportsbook. The commission would slap together a ranking system in the next 11 weeks to decide objectively which maiden is the fairest.)
Beginning in the second year, licensees would provide at least $6 million annually for responsible gambling and at least $5 million for youth sports programs in underserved communities.
How did the New York sports betting plan happen?
Weeks ago, Cuomo and both legislative houses agreed to include mobile NY sports betting in the state budget. Sen. Joe Addabbo and Assemblyman Gary Pretlow pushed for an open, competitive model with up to 14 skins – two each for seven state casinos.
Negotiations produced little movement from Cuomo, who refused to consider mobile wagering in previous years. The embattled governor remains convinced a state monopoly will maximize revenue to the state.
Budget projections show $99 million in state revenue for the remaining fiscal year and $357 million for the second year, with $500 million in the third. An LSR analysis from January showed Cuomo’s plan to reap $500 million annually from NY sports betting likely is fantasy.
That breakdown suggested for New York to achieve $500 million in taxes through Cuomo’s model, the state would need to take $13.5 billion in handle. By contrast, New Jersey saw nearly $6 billion in handle in 2020, which likely included a healthy amount of New York-based players.
Tribal concerns linger in New York
As the original budget deadline of April 1 drew closer, legislators representing the area of the Oneida Nation expressed concerns about the emerging deal. They said Cuomo’s plan could leave 10 upstate counties out of NY sports betting, according to Sen. Joe Griffo:
“Cutting out major parts of Upstate New York from participating in mobile betting is terrible public policy and would be unfair to these residents,” Griffo said. “If tribal nations are not incorporated into the state’s final bill, we would potentially be disenfranchising millions of New Yorkers from participating in mobile sports betting and from the economic benefits it generates.”
The Oneida Nation released a statement to the Buffalo News on Tuesday night making clear they do not see this issue as closed:
“We are disappointed and believe the legislation is a step backwards, as the State apparently expects the Oneida Indian Nation to bid for the right to offer mobile sports betting within our own 10-county zone, for which the Nation already pays the state and localities about $70 million per year for gaming exclusivity pursuant to our 2013 Settlement Agreement.
“The Nation had worked hard with multiple parties to negotiate a compromise that worked for everyone, and was approved by the Assembly and the Senate, and endorsed by all of the tribal and commercial casinos. It is unfortunate that the State has chosen instead to take such an unbalanced approach that will unnecessarily hurt our region. We remain open to discussing workable solutions when the state is prepared to do so.”
The perceived threat of future legal action looks to hang thick in the Albany air.
NY sports betting bill summary
Bettors wagered more than $47 billion and created $3.3 billion in revenue in roughly the first three years of legal US sports betting. States collected a combined $467 million in that time.
They employed one of two basic versions of sports betting: either a competitive model like New Jersey or a lottery monopoly like Oregon. Even when Illinois chose to get coy in trying to lock out DraftKings and FanDuel, the basic tenets of its legalizing bill were recognizable, if ugly.
New York arrives today with an apparent intent to reinvent the wheel of a car speeding across the George Washington Bridge to keep betting in New Jersey.
Inclusion in the state budget strongly increases the chances this NY sports betting plan will pass into law. Still, legal challenges appear nearly certain, whether from the Oneida Nation or from casinos relegated to playing landlord for servers.
Let’s not forget that mobile sports betting in New York felt unachievable year after year until today. But what exactly did the Empire State achieve?