New York Advances Mobile Sports Betting

Faced with severe deficits, Governor Andrew Cuomo and the New York State legislatures raced to meet a looming budget deadline. During which, they have come as close as they ever have to legalize mobile sports betting in the Knickerbocker state.

New York’s projected shortfall has also led to some compromise on legalizing marijuana. Now, with only hours remaining, stakeholders on all sides are attempting to jockey for position as the scope, scale, and details of several competing proposals come down to the wire.

The general consensus is that the State’s need for cash will probably see some sort of Sports Betting Bill passed. But with significant disagreements between Governor Cuomo and the Senate, and specifically Senator Joe Addabbo Jr, it’s still anyone’s guess what that bill will look like or even if it will happen.

One sure thing is that even if the bill is rammed through, the New York State Gaming Commission will have its work cut out for it. It will need to start writing the rules and regulations that will need to be in place before the first bet is made on someone’s smartphone.

It’s a task that will take many months, and depending on which direction the Governor and Legislature go, may see the license of only one sports betting provider or several dozen. And some of the many hurdles that remain revolve around this decision on the number of licensees.

Cuomo Backs Public-Private Partnerships

Governor Cuomo has long backed a much smaller amount of licensees. At one point, he was hoping that the state’s lottery commission could run the whole affair, where all proceeds go straight to the state budget.

However, this option would likely be unconstitutional due to state-specific laws against gambling that would tie the Lottery Commission’s hands. In 1984, a New York Attorney General wrote that having the State Lottery running a sports betting operation would violate Article 1, section 9 of the State’s constitution.

So the Governor is now touting the route of public-private partnerships, backed by the fact that several states in the North East have chosen this same route. Most notably, DraftKings and the State of New Hampshire entered into an exclusive contract that sees the state receive 51% of gross gaming revenue until 2026. This, while the legal situation in NH is also fluid and complicated.

Nevertheless, Cuomo believes that by awarding the contract to the highest bidder, or at least one or more of the already-licensed upstate commercial casinos, the state can earn close to half a billion dollars a year. The Governor also believes that this option can be implemented much more quickly and provide more control than some of the competing offers floated in the State Assembly.

Senator Addabbo and Assemblyman Pretlow Want To Share The Wealth

Senator Addabbo and Assemblyman Gary Pretlow have a much grander scale in mind when it comes to sports betting licensees. The two have rounded up all parties involved to create a larger profit-sharing scheme. This is probably not so much philanthropic as it is practical because a potential lawsuit from any disenfranchised party could slow things down for years and prevent mobile sports betting from ever launching.

Such parties could include anyone from the State’s five off-track betting parlors to all the State’s major sports franchises venues. These would include the eleven Horse Racing facilities. Even in a sort of back door attempt at getting around IGRA, all the licensed Indian tribes would participate in their affiliate scheme.

These would also be affiliate licensees of the four upstate casinos. By the proposals, they would be able to open their own sports betting parlors and online skins. In return, these casinos would share their gross gaming revenue with the State. This approach has proved so popular that a version of it already passed the New York Senate way back in 2019.

A Parting of Ways

Where Senator Addabbo and Assemblyman Pretlow disagree could be as important as where they do. While divorced from the actual issue of mobile sports betting, the issuance of three casino licenses in what is referred to as the downstate area has loomed large for the past several years. And it could play an outsize role in this year’s negotiations.

As mentioned, like any other state, New York needs funds to recover from the COVID pandemic effects. It believes that it can get a one-time licensing windfall of $1.5 billion for the three downstate licenses at $500 million each. However, there is an exclusivity that the state had initially agreed to give the casinos operating upstate until 2023 before introducing more competition.

This alone has caused some friction between Senators and Assemblymen from competing areas. But perhaps the most significant disagreement is over the third license. It is almost agreed that two of the State’s licenses would go to the Empire State Racetrack and the Aquaduct, especially as rules have been altered in favor of licensing to favor pre-existing sites.

But the bidding for the third license has caused a sharp rift between Senator Addabbo and his colleague in the Assembly, Gary Pretlow. A rift sharp enough to potentially cause competing bills. Assemblyman Pretlow believes that the third license bidding would potentially be a lawsuit plagued endeavor threatening the entire gambling bill’s future.

Tribes Up In The Air

While this bill’s fate hangs on legal challenges, getting the buy-in of the Tribal Gaming commissions would seem vitally important. But there is no sure way forward for either proposal for the Native American tribes, as Governor Cuomo leaves them out altogether. The current mobile sports betting bill pushed by Addabbo and Pretlow would allow them to act as a sort of super affiliate. It seems to bypass the Indian Gaming Regulatory Act by placing mobile servers on the reservations and arguing that such betting is then taking place in a location covered by the Act. This is no legal slam dunk though and could face pushback from Federal regulators that would leave the Tribes out in the cold and feeling potentially litigious.

Timing Is Crucial

Governor Cuomo is known for getting his budgets passed on time and in his image. But this year, he is facing the political battle of his life as he faces two separate scandals that would have brought down a lesser politician. In some ways, his willingness to make deals on not just mobile sports betting. But also to introduce downstate casino licenses and even potentially legalize marijuana. It is a reflection not only of his own precarious legal position but that of the State’s budget as well. Time will tell which way the chips will fall.