New York State will expand its sports betting business to include mobile following this week’s budget announcement by Governor Andrew Cuomo. His plan, which was approved by the General Assembly, centers on a state-run rather than free-market approach with a view to generating upwards of $500m in state revenue.
An official statement from Cuomo’s office offered brief details of his plans, saying: “The FY 2022 Enacted Budget authorizes mobile sports wagering. Once fully phased in, legalization will provide more than $500m in much needed revenue for the State to help rebuild from COVID-19 and grow what could be the largest sports wagering market in the US into a profitable industry long-term.”
Under the new legislation, the state will issue a Request for Applications and must select at least two platform providers who must work with a total of at least four operators or skins. Once fully phased in, the program will provide $5m annually to youth sports, and $6m to combat problem gambling, doubling the resources currently available. The remainder of this new revenue will be dedicated to education.
Addressing the budget highlights, Cuomo noted in a separate statement: “Mobile sports betting will pass. It will generate $500m annually for youth sports education. The law allows the state to directly operate mobile sports betting. So the $500m will go to the state, rather than a lot of middle men who operate mobile sports betting, which is what many other states have done.
“This is like the state lottery where we operate it and we get the resources. The law does not authorize any new casinos. I am opposed to any casino authorization plan that is subject to politics. We have a Gaming Commission that makes the decision on the merits.
“There’s a lot of money involved in casinos. There’s a lot of lobbyists, there’s a lot of political contributions and I want to make sure that any decision that is made is made purely on the merits and I’ll have nothing to do with a casino plan that can be politicized.”
While the news has been hotly anticipated by industry observers and potential entrants to an expanded New York sports betting sector, there are already doubts about Cuomo’s ambitious projections. His state-run model is likely to generate more money for New York State coffers, but could fall some way short of that $500m.
Analyst Eric Ramsey, writing for PlayNY.com, estimates that operators would need to generate circa $1bn in GGR to achieve $500m in annual tax revenue, based on a 50% revenue share.
He said: “Reaching $1bn in annual GGR ($500m in tax revenue) would require operators to book at least $10bn in total wagers, which would require an average New York adult to wager about $615 every year. This assumes a generous 10% hold, which is well above the national average of 7.2%.”
Ramsey added that by using that number, total handle would need to reach closer to $14bn to meet projections. Softening the revenue share to a seemingly more realistic 40% means that the handle requirement soars to nearly $17.5bn, equal to betting spend of $1,100 per adult per year.
DraftKings Sportsbook, with a land-based sportsbook in the state at Del Lago Resort & Casino in Waterloo, is already well positioned to contend for one of the mobile licenses.
The firm’s Vice President of Government Affairs and Associate General Counsel, Griffin Finan, was quoted by Casino City Times, saying: “We want to thank the legislature and Governor Cuomo for the progress made in bringing legal, regulated, mobile sports betting to New York. We look forward to learning more as the process continues to unfold.”