Online Sports Betting in New York Faces Challenges

Will the Empire State's go live by the Super Bowl?

Online Sports Betting in New York Faces Challenges

Since still current for a few more days New York Governor Andrew Cuomo announced his support for online sports wagering in January of 2021, mobile sports betting has faced several roadblocks. This was an about-face for Cuomo, who had opposed mobile gambling for years. The soon-to-be-former governor changed his tune, though, and threw his weight behind legalization efforts. 

In April, Cuomo debated the merits of the bill, stating it would bring in far more tax revenue than the current state-run lottery. This is the financial argument facing most states and that most states are bowing to — tax revenue is something they all desire and find very hard to ultimately resist. On April 19th of this year, those debates concluded with the signing of legislation legalizing online sports betting. 

Unreasonable Legislation

But the signing was just the beginning of legal speed bumps in the road for New York’s sports betting market. Soon after the signing, sportsbook operators noted the heavily tilted tax system present in the legislation, with the state of New York taking as much as 50 percent of the operator’s revenue in taxes. 

This came with a $25 million dollar price tag for the initial license, not to mention a $5 million maintenance fee to house their operation in one of the four licensed casinos. Sports bookers quickly saw the main tenets of this legislation for what they were: a very unfriendly business arrangement.

While gambling houses certainly are known to make money, they do operate on volume, not margin, meaning they make a little per customer, but bring in a ton of customers. Like a Walmart or Costco. Artificially higher prices can wreak havoc with that model.

New York State Gaming Commission

Past that, sportsbooks have also had to contend with strained communication with the New York State Gaming Commission. The commission missed the initial July 1st deadline to allow sportsbook operators the ability to bid for licenses instead of opening the bidding eight days later on July 9th. 

This bidding delay didn’t stop many sportsbooks from applying, though the amount of bids seems low. With six current bids for online sportsbook licenses on the books, it seems as though the market isn’t too competitive. But if you look closer, you see the largest bid is actually a combination of multiple big names from the mobile sports betting market.

Sportsbook Super-Groups

Announced to the public on August 9th, many sportsbook giants have joined forces in an attempt to get in on one of the most lucrative spaces in the sports booking industry. One of these alliances in the quest for domination of the New York Market stands out. 

Sports booking company Fanduel has joined forces with three other well-known names in the industry: DraftKings, BetMGM, and Bally Bet. These four companies are also partnered with several major sports teams, including MLB’s New York Yankees, NFL’s Buffalo Bills, and the NHL’s Sabres. The market share these combined forces hold is staggering, and their alliance stands a good chance of establishing a massive monopoly in the online gambling space. 

Governor Cuomo’s Resignation

Now, the resignation of Governor Andrew Cuomo, who initially signed the sports gambling bill, has some worried yet another wrench will be thrown into the works. Governor Cuomo was investigated for the sexual harassment of 11 women and announced his resignation on August 10th. With sports betting set to begin in February and one of the bill’s most notable proponents exiting office, well, its launch be further waylaid? 

State Senator Joseph Addabbo doesn’t believe so. Senator Addabbo, a strong proponent of online sports betting in his state, believes Governor Cuomo’s resignation will have little effect on the bill. Many other backers share his convictions, and the proposed tax revenues have only served to entrench their opinion.

Massive Boost to State Revenue

Along with the recent legalization of recreational cannabis, online sports wagering is set to be a massive boost to the state budget. New York State Comptroller Thomas DiNapoli estimates that in its first year, online sports betting will net almost $99 million in tax revenue. 

The comptroller went on to say that by the beginning of 2025, once widespread adoption of the online model has spread, that tax revenue could grow to closer to $493 million per year. These taxes would boost the state’s general fund, with legislators saying a majority will go to help youth sports and education grant programs. 

The Same Goal: The Super Bowl

With the goal of having mobile sports wagering live by the 2022 Superbowl, New Yorkers do have the option of getting in on the action in person. With legalization in 2013 and a solid framework finally solidified in 2019, New Yorkers willing to travel to the state’s licensed casinos can currently place bets on their favorite teams. 

These casinos range from large commercial locations to small pizzerias. For gamblers who enjoy the social aspects of placing a sports bet, this works great. But for those introverted New York sports fans, online wagering can’t come soon enough.

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