New York governor Andrew Cuomo is expected on Monday to give details of his plans to legalise mobile sports betting in the state, creating the largest market for sports betting in the US.
The move is part of a plan to raise $800m a year in taxes from mobile sports betting and the proposed legalisation of marijuana in New York, which is struggling with a projected $14.9bn shortfall this year due to the pandemic.
Mr Cuomo said on Wednesday that he wants state administration of mobile gambling, similar to New York’s lottery system, as a means of controlling more of the tax income. He is expected to give more details in his annual State of the State address on Monday.
“Many states have done sports betting but they basically allow casinos to run their own gambling operations,” he said. “That makes a lot of money for casinos, but it makes minimal money for the state. I’m not here to make casinos a lot of money, I’m here to raise funds for the state.”
Still, wagering platforms and industry advocates are sceptical of Mr Cuomo’s plan. Dustin Gouker, an analyst for the gambling trade research site PlayNY, said the industry is awaiting the full proposal from the New York state budget, to be completed this spring.
“The devil is always in the details, but opening a market that could be worth more than $20bn a year in bets could be a game-changing moment for the entire industry,” Mr Gouker said. “On the other hand, a state monopoly, such as what Gov Cuomo proposed, would be a mistake that could forever limit the ceiling for New York.”
Mr Gouker’s estimate that New York could yield $20bn in wagers would place the state first among those with legal sports betting. Since the Supreme Court struck down a federal ban on the practice in 2018, Nevada and New Jersey top the rankings of legal sports gambling, logging wagers of $12bn and $10.9bn, respectively, so far, according to Legal Sports Report.
That Supreme Court ruling has led to consolidation among casino and gambling companies as outfits chase a piece of the growing US market. During the first nine months of 2020, gross gaming revenues for US sports betting rose 27 per cent to $677.8m, according to the American Gaming Association.
In spring of 2020, daily fantasy sports app turned online sportsbook DraftKings went public through a complex reverse-merger, now heralded as one of the most successful special purpose acquisition company, or Spac, moves of the year.
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Griffin Finan, vice-president of government affairs at DraftKings, said the company’s customers are eager for mobile betting in New York but recognise that “significant legislative and regulatory steps remain”.
In-person sports betting is currently legal in New York at 11 designated casinos and operators, according to the AGA, all of which are in the state’s upstate region north of New York City.
Downstate leaders are hopeful that Mr Cuomo’s backing on mobile sports betting would eventually lead to the approval of casinos in New York City, adding jobs in a hotel industry “devastated by the pandemic”.
“Properly regulated, sports betting is an appropriate source of revenues and entertainment and there is no reason that New Yorkers should not enjoy those benefits as much as other states that have subsequently legalised the practice,” said Kathryn Wylde, president of the Partnership for New York City, a business and employers group, welcoming the move.
In 2005, the Partnership published a study estimating that legalised sports betting could net New York state anywhere from $290m to $1.9bn a year in tax revenue while undermining organised crime.
Meanwhile, 15 US states have passed laws to legalise and regulate the use of recreational marijuana since 2012, generating $6.6bn in tax revenues through November 2020, according to the advocacy group the Marijuana Policy Project.
Earlier New York legislative efforts to legalise both vices were pre-empted by the onset of the pandemic last spring, which interrupted the state session that typically concludes in March.
Additional reporting by Joshua Chaffin