Word that’s New York’s governor was officially going to embrace online sports wagering was initially met with praise Wednesday by the sports betting community.
But when Gov. Andrew Cuomo said during a press conference that he wanted the New York Lottery – not the state’s casinos – to operate the activity in order to maximize the tax revenues, sports betting operators and investors in publicly traded companies would be in for a letdown.
“I’m not here to make casinos a lot of money. I’m here to raise funds for the state,” Cuomo said. “So we have a different model for sports betting.”
New York Gov. Andrew Cuomo
Credit Suisse gaming analyst Ben Chaiken, after telling investors early Wednesday mobile sports betting could be a financial boost for operators such as DraftKings, softened his remarks following Cuomo’s briefing.
“Sounds like New York will offer differentiated online sports platform, such that (the) state generates more income … versus our previous expectations,” Chaiken told investors.
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, however, 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.
Under Cuomo’s plan, New York’s gaming commission will select and license a sports operator or platform to offer mobile sports betting. The operator must have a partnership with one of the existing licensed commercial casinos.
Cuomo said Wednesday mobile sports betting could open a lucrative new market in the nation’s fourth most populous state. Mobile sports betting in New York could cut into business currently lost to sportsbooks in New Jersey, which offers mobile sports betting.
New York City residents often drive or take a train to New Jersey, sign up for mobile sports betting accounts, and wager online there. FanDuel told Bloomberg News a year ago that an estimated 22% of its New Jersey online wagers came from New York residents.
Cuomo sees mobile sports betting as helping close New York’s four-year budget gap, estimated at between $70 billion to $75 billion.
“At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets,” Cuomo said.
The governor said New York has the potential to be “the largest sports wagering market” in the U.S.
“New York has the potential to be and by legalizing online sports betting, we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis,” Cuomo said.
Macquarie Securities gaming analyst Chad Beynon didn’t disagree with the sentiment.
Chad Beynon, Macquarie Securities
“We believe the Governor’s statement vindicates our bullish view that online sports betting/iGaming/iLottery will see greater support on the back of growing state deficits,” Beynon told investors. “New York represents one of the most attractive sports betting states given its large population, high income, and sports culture. That said, New York sports betting gaming revenue has lagged that of neighboring states such as New Jersey and Pennsylvania, given a lack of mobile offering.”
Sports wagering consultant Sara Slane predicted New York could regularly top $1 billion a month in wager if it added mobile sports betting.
“We’ve consistently seen that bettors want to wager on sports and mobile, just like all other industries, is the modern mechanism for the industry to drive the most revenue back to the state,” Slane said.
BetMGM CEO Adam Greenblatt said the company, which currently doesn’t operate in New York, was interested in entering the market.
“Legalizing sports betting has the potential to bring leaking tax dollars back to New York from offshore books and nearby states,” Greenblatt said in a statement. “We’re eagerly awaiting next steps and have every intention of working closely with regulators in New York to bring BetMGM’s leading digital offering to the state.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
