New York Gov. Andrew Cuomo had the sports betting universe anticipating dollar signs last week after suggesting he might not block the legalization of mobile sports betting as a way for the state to repair its budget holes.
One gaming analyst, however, said mobile sports betting tax revenues weren’t the answer to the state’s financial troubles and that legislative discussion next year could prospectively include a much-anticipated integrated casino-resort in New York City.
In a note to investors Friday, Deutsche Bank gaming analyst Carlo Santarelli said a tax rate on mobile sports wagers of between 8% and 13% would generate anywhere from $75 million to $125 million in annual tax dollars for New York, based on current market forecasts.
The state is facing a four-year budget gap of between $70 billion to $75 billion. Santarelli suggested federal aid and other measures could trim the gap to roughly $60 billion.
“The taxes from sports betting would equate to roughly 1% of the annual run rate deficit,” Santarelli said. “Over time, Gov. Cuomo has resisted mobile sports wagering and is said to be largely dismissive of the impact from the tax revenue stemming from sports betting in general. We largely agree with this.”
Santarelli said the budget deficit matters could lead to another potential tax revenue enhancement through gaming – a New York City destination resort casino.
“We get the sense that broader gaming expansion has become a far more important front-burner issue than it has previously been,” Santarelli said. “Given both the state tax ramifications, as well as the job creation, we believe the prospects for a New York City area destination resort casino are likely to appear brighter in 2021 than any time prior.”
Las Vegas Sands has been actively seeking to move up a voter-mandated 2023 timeline for when New York State can authorize an integrated resort in the nation’s most populous U.S. city. Last year, the company hired former New York Gov. David Paterson to help in the effort. Las Vegas Sands released a study showing an integrated resort in the New York City market could bring $1.5 billion in revenue that could be used to fund the New York Metropolitan Transportation Authority, public education, or other needs.
In March, Las Vegas Sands donated 2 million medical masks and 20,000 protective suits to help health-care providers, first responders, and nonprofit organizations deal with the coronavirus pandemic in both the company’s home state of Nevada and in New York.
Santarelli said New York’s budget deficit could fuel momentum for the large-scale complex in Queens and suggested Las Vegas Sands was the front runner.
“We believe Las Vegas Sands could spend upwards of $5 billion on this project and generate not only considerable recurring gaming tax revenue, but also add nicely to job creation,” Santarelli said. “We would note that the politics around this are likely to be tricky, however.”
As for sports betting, New York currently allows retail sportsbooks at eight commercial and tribal casinos, mostly upstate or in the central region. Resorts World Catskills is the closest full-sized casino to New York City, roughly 90 miles north. Rivers Casino Schenectady is 26 minutes from the state capitol in Albany. Sportsbook operators include Caesars Entertainment, Rivers, DraftKings, and FanDuel.
Retail sports betting has not been a financial bonanza for New York. Financial information released by the state does not include the amount wagered inside the sportsbooks. Monthly revenue, however, has seen a high of $2.6 million in both October and November.
Mobile sports betting has, however, been a financial boon – for New Jersey. Through remote registration, New York customers can set up mobile sports betting accounts with both northern New Jersey racetracks and Atlantic City casinos.
In January, media outlets reported that New York City residents drive or take a train to New Jersey, sign up for mobile sports betting accounts, and wager online there. FanDuel told Bloomberg News in January that an estimated 22% of its New Jersey online wagers came from New York residents.
The result? In November, New Jersey sportsbooks took in a single-month record of $931 million in sports wagers. Almost 94% of the bets – $872 million – were made through a mobile app or online.
Eilers & Krejcik Gaming told Legal Sports Report that New Yorkers bet an estimated $837 million in New Jersey in 2019. According to the research firm, the wagers translated to $57 million in revenue. Basically, the analysts said, New York lost about $6 million in tax revenue.
Last week, during a COVID-19 briefing, Cuomo said, “Are there other ways to get revenue? How about marijuana? How about sports betting?” when asked about the budget issues.
New York’s strongest sports betting proponent in the legislature, State. Sen. Joseph Addabbo Jr., told Legal Sports Report, “We’re running out of time for this year so now we look at next year, but I can’t see us waiting until the April budget.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
