Why NY Cell Sportsbooks Can Look Like Pennsylvania


Posted on: Jan 24, 2021, 11:40 am.

Last update on: January 24, 2021, 11:44 am.

Steve Bittenbender

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Mobile sports betting in New York is closer to reality than ever before. That said, it's far from a slam dunk at this point.

New York Governor Andrew Cuomo blamed Washington for the state's financial disaster during his January 19 budget address. How much help Congress is giving the state can help discourage Cuomo from proposing to run mobile sports betting in the state like the lottery. (Image: GovernorAndrewCuomo / Flickr)

Governor Andrew Cuomo has spoken out in favor of expanding sports betting. His plan, however, is a radical departure from the plan envisioned by lawmakers – a bill passed by the Senate several years ago.

State Senator Joseph Addabbo (D-Queens) and State Representative Gary Pretlow (D-Mount Vernon) want the state's casino licensees to offer sports betting, and they're ready to give them an extra skin that would expand the market to at least 14 operators in the state – once the three downstate casino licenses are approved. There are also some opportunities for the state's three tribal game companies, Class III. The state would tax mobile income at 12 percent.

This model is similar to how states like Indiana and New Jersey deal with sports betting.

Cuomo would rather cut the middleman when it comes to sports betting. He wants the state to work with one or more operators to get a bigger cut. It's a proposal likely modeled on the New Hampshire system.

According to the comments made by lawmakers last week, the gap between Cuomo and lawmakers seems wide.

"This is much better than what the governor put on the table or displayed in his state." Senator Pamela Helming (R-Canandaigua) said at a meeting of the Senate Committee on Races, Games and Betting last week regarding the Addabbo committee chairman's bill. (See video below)

Helming herself was not entirely on board, as she raised concerns that racinos could be left out. However, your comments show where the legislature stands. Both bills were passed in their committees last week without a no.

With the New York budget year beginning April 1, lawmakers and the Cuomo administration only have more than two months to reach consensus. Where can they land when all is said and done?

The answer could be in Pennsylvania.

Pennsylvania made more than New Jersey in 2020

Former New Jersey Governor Chris Christie went to his neighboring state to the west at the 2019 Global Gaming Expo. He called the Pennsylvania sports betting system "a rolling dumpster fire".

Pennsylvania has a high barrier to entry with a license fee of $ 10 million. In addition, a 34 percent tax is levied on sports betting income.

New Jersey made headlines in the final months of 2020 as sports betting exploded nationally, thanks to the return of major professional and college sports that had returned from the COVID-19 pandemic. Just last month, a record $ 996.3 billion was hit for sports betting.

New Jersey's totals are apparently aided by the lack of mobile devices in New York. It is estimated that New Yorkers crossing the Hudson River make up about 25 percent of the Garden State's market.

Meanwhile, Pennsylvania set a new sports betting record for its state at $ 548.6 million in December.

Despite differences in sports betting traffic, Pennsylvania's "dumpster fire" system still generated more tax revenue for its state than New Jersey. Pennsylvania posted tax revenue of $ 11.6 million in December compared to $ 8.3 million in New Jersey. For the 2020 calendar year, Pennsylvania earned $ 64.5 million versus $ 50 million next door.

When New York faced a billion dollar deficit and likely little help from Washington, Cuomo eventually gave up his opposition to mobile sports betting. However, he said he intended to make $ 500 million annually from the game by issuing one or more licenses to companies that would pass the lion's share of the proceeds on to the state.

This is not a moneymaker for private interests just to get more tax revenue, ”said the governor during his budget address last week. "We want real sports betting income."

The governor's budget proposal predicts the state will generate $ 357 million in sports betting in fiscal 2023. The $ 500 million figure is what state officials have come to expect from a mature sports betting market.

How Washington NY Can Affect Sports Betting

When Cuomo first announced his plan for sports betting last month, he saw a different political reality than the one we have now.

For months, Cuomo has been promoting a number, $ 15 billion, during his daily COVID briefings. That was the projected deficit New York officials projected for the upcoming budget.

Cuomo has insisted that Washington's failure to keep European travelers out of the country in early 2020 set the stage for the health disaster the state faced in the first few weeks of the emergency last year. He has also mentioned several times that New York's federal tax dollars are often used to subsidize other states. So, in his opinion, the state must get some repayment.

Last month, Congress passed a COVID stimulus plan that did not provide relief for state and local governments. At the time, it seemed obvious that Republicans would retain control of the Senate for Congress in 2021-22, which made Cuomo's hopes of receiving that federal aid a huge success.

At this time, Cuomo began to speak publicly about sports betting.

But then another long shot came through. Georgia elected two Democrats to the US Senate and gave them control of both houses of Congress and the White House. It resulted in Cuomo making last minute changes to his speech on the state of the state.

If Washington gives Cuomo the $ 15 billion, it may be preventing himself from doing sports betting like the lottery, as he mentioned. He will still want the income but will need it less.

There is also a group of Albany lawmakers pushing for more progressive taxes, including higher taxes on top earners. Cuomo has chosen not to do this for fear it could drive more taxpayers out of the state. This provides an opportunity for lawmakers and administrators to reach an agreement on how to evaluate new sources of revenue like mobile sports betting and legalized recreational marijuana.

But that may ultimately depend on the size of a check that Congress in New York cuts.

Sports betting can reach $ 1 billion in revenue in New York, according to the Spectrum Study

Earlier this month, the Spectrum Gaming Group of the New York State Gaming Commission shared their market study of the state. It forecasts gross annual gaming revenue for advanced sports betting from $ 816 million to $ 1.1 billion.

For its report, Spectrum only submitted tax revenues based on a 10 percent forecast, likely because Cuomo's proposal for analysis came too late. That meant tax estimates of up to $ 104 million per year.

However, if the sales analysis is feasible and there are others who believe the same, New York could set a high tax rate on revenue, generate a return that is acceptable to Cuomo, and still create a system that allows multiple operators to set up shop.

It may not be popular, but Pennsylvania showed that a high tax rate wasn't as daunting as some would have expected before sports betting. It could also be the key to making mobile a reality in New York.