Online Sports Betting NY: The Top Sportsbooks for New Yorkers With New Jersey on the cutting edge of gaming technology, including legalizing online poker and mobile sports betting, you’d think that their neighbor, the Empire State, would be nipping at their heels. However, online sports betting NY.
- Mobile Sports Betting In New York Update While the state has yet to legalize online sports betting, it was discussed as part of an emergency revenue-raising strategy in 2020 during the COVID-19 pandemic. Nothing came of the measure, but a new glimmer of hope emerged in January of 2021. However, it came with a catch.
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With New York facing a $15 billion budget shortfall from the coronavirus pandemic, online sports betting is viewed as one possible way to inject much-needed money into the state. New Jersey legalized online wagers in 2018, and earlier this month, Governor Andrew Cuomo included an online professional sports betting plan in his executive budget proposal that he claimed would raise $500 million in revenue for the state.
But many logistical hurdles remain. Cuomo’s proposal for legalization runs counter to what the Democratic supermajority in the state legislature is pitching. Some authorities are questioning the legality of the whole enterprise. And there are lingering concerns about gambling and addiction, particularly with the number of people sequestered at home and the opportunities that could be suddenly available to lose significant amounts of cash.
“I don’t see the governor’s proposal as workable in New York,” said Assemblyman Gary Pretlow, the chairman of the Committee on Racing and Wagering.
Right now, you can place horse racing bets on your smartphone through an app run by the not-for-profit corporation that oversees horse racing in New York’s three major tracks. Mobile betting for professional sports could theoretically function in a similar way. Currently, the servers for horse betting are located at the racetracks.
In both Cuomo and the legislature's proposals, the servers for mobile sports betting would be situated at places where bets are already taken, like casinos. The major overriding question is how many operators, or “skins,” as they are called in the industry, there will be, and who will get to profit.
Under Cuomo’s proposal, which still needs to be fleshed out further, the New York State Gaming Commission would be directed to solicit bids for a small number of mobile sports wagering operators. The system would be akin to how the state-run lottery functions, with possibly only one or a small number of operators overseeing sports betting. A single operator runs online sports betting in New Hampshire, Oregon, Rhode Island and the District of Columbia. Overall, sports betting is now legal in more than two dozen states.
Robert Mujica, Cuomo’s budget director, said earlier this month that the advantage of the state proposal would be the ability to maximize tax revenue. “The fundamental question is: if you want to support the bottom line for casinos or New York’s students. And the governor’s proposal chooses students,” Mujica told the Wall Street Journal. (An identical statement was sent to Gothamist from Freeman Klopott, a budget spokesman for Cuomo.)
It’s not clear yet what Cuomo’s tax rate would be for his online betting model, though Mujica has asserted that it would be enough to raise $500 million a year. The state legislative proposal, co-sponsored by Pretlow and the chairman of the State Senate’s Racing and Wagering Committee, Joseph Addabbo, puts the number closer to $100 million annually.
At first glance, that would seem to make Cuomo’s proposal the better one, given the potential for serious state budget cuts without new forms of revenue. But lawmakers and some gambling industry insiders aren’t so sure. In New Jersey, which is generally viewed as a success given the number of people who place bets, there are as many as 17 legal online sportsbooks.
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New York’s legislature is looking to take a similar approach, believing their proposal has a better opportunity for growth—more operators can lead to more options for consumers and more interest in placing bets. Addabbo calls his legislation “inclusive,” because it would also allow for Native American casinos, casinos on state property, and off-track betting sites to participate.
“Competition bodes better for our residents and will drive up revenues than being a narrow state-run lottery kind of system,” Addabbo argued. “New York finds itself in a very odd position not being a leader. We are outside looking in. New York right now is a three-wheeled car limping along in the right lane. New Jersey and Pennsylvania are speeding by us.”
Bennett Liebman is a government lawyer in residence at Albany Law School who previously advised Cuomo as the deputy secretary for Gaming and Racing. He said the difference between the two models is a question of what is being prioritized: more tax revenue, or a better model, long-term, for consumers and gambling interests?
“It all depends on what you want in your market. If you want what the governor is seeking, which the draft is very general, you are looking for maximum tax revenue, you will give it to one or two groups and you are going to tax them at a very high rate,” Liebman said. “If you are looking to create a robust market to help out casinos and consumers, then you go with, or you are more inclined to go with, the legislative plan.”
Liebman called the Cuomo administration’s $500 million revenue figure for online sports betting “very, very high,” and predicted a few operators would dominate the space in New York, like DraftKings and FanDuel have done in New Jersey. Casinos, racetracks, and online gambling in total generated a little more than $300 million in tax revenue for New Jersey in 2020.
Even if New York reached Cuomo’s projections—let alone the far smaller figure from the state legislature—online sports betting would represent only a minuscule fraction of a state budget that was $177 billion last year. One question hanging over the debate is whether the united front fighting for mobile sports betting in New York—the currently existing casinos, and operators like DraftKings and FanDuel—would crumble if only a small number of them were selected to make money from sports betting.
According to a constitutional amendment passed in 2013, sports wagering in New York is currently allowed only in physical portions of its four existing commercial casinos and other facilities operated by Indian tribes. Cuomo and supporters of online sports betting believe their proposal will meet the requirements of the state constitution by locating the servers for the betting websites at the physical casinos.
Neil Murray, an Albany attorney who has sued to oppose gambling in the state, said there was a “legitimate, serious question” about the constitutionality of online sports betting.
“The problem right now is the constitutional amendment that was passed several years ago does carve out exceptions for gambling at casinos. The operative word is ‘at’ and what does that mean?”
Murray argued the way the amendment was proposed—an economic stimulus for destination casinos that would prevent the proliferation of gambling statewide—contradicts the arguments made for mobile sports betting today. “If you allow online gambling and people can gamble from their living rooms, then of course that destroys the whole purpose on which gambling was authorized on a limited basis to begin with,” he said. “Everybody is counting on collective amnesia.”
Pretlow, the state assemblyman, contended that his bill met the requirements of the state constitution but Cuomo’s would not if it chose to operate like the state lottery. The lottery is regarded as a game of pure chance with no skill involved, allowing it to circumvent a longtime prohibition on gambling in the state.
“The lottery has to be 100 percent chance. The lottery is not gambling,” Pretlow said. “It’s flip a coin, heads or tails, nothing in the middle. I think if the lottery were to handle sports betting, it would lead to a constitutional question.”
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The No. 1 contender to New Jersey’s online sports betting dominance finally appears ready to enter the game.
After dismissing the idea for the better part of two years, New York Gov. Andrew Cuomo announced his support of online sports gambling last week. It was one of several policies included in the governor’s annual budget presentation as a way to make up state revenue shortfalls from the coronavirus pandemic.
“New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis,” Cuomo said in a statement to the Daily News.
The governor does not have to look very far for a successful online sports gambling market to convince lawmakers in Albany that taxing legal wagers would help replenish state coffers.
New Jersey will exceed $5 billion in total online sports wagers for 2020, generating more than $40 million in taxes for the state in the calendar year.
December numbers will be released on Jan. 13.
Will New York overtake the online sports betting leader?
Most industry analysts believe that the Empire State’s online sports betting market will surpass New Jersey’s.
“Gov. Cuomo’s embrace of mobile sports betting immediately positions New York to soon lead all other states and generate significant revenue for state coffers,” Sara Slane, an industry consultant and former official with the American Gaming Association, told the Associated Press. “New York, with a population of nearly 20 million, dwarfs any other state with legal betting and should have no problem regularly topping $1 billion a month in wagers.”
The Garden State was an early adopter of online sports betting and quickly became a standard-bearer.
Jane Bokunewicz, coordinator of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, said, “it was inevitable that other states would follow, especially after seeing New Jersey’s success.” New Jersey was aware that competition would eventually arrive.
“As the market for sports betting continues to develop and expand both within New Jersey and in neighboring states, New Jersey could lose ground in terms of market share, but it will be far from out of the race,” she said. “Sports betting will continue to contribute significant tax revenue to the state even if not at the same levels we’ve been seeing given both New Jersey’s near-monopoly on East Coast online sports wagering and the pandemic.”
Business has been good for NJ
New Jersey lawmakers included online tax rates when they legalized and regulated sports betting in the spring of 2018. The first online operator, DraftKings Sportsbook, started taking wagers that August and eight others followed suit by the end of the year.
New Jersey collected just under $7 million from a 13% tax applied to online sports betting revenue in 2018. Almost 63% of the total sports wagering handle that year was from online action.
In 2019, 84% of the nearly $4.6 billion statewide handle were bets placed via NJ sports betting apps. New Jersey collected more than $31.8 million in taxes from online sports betting revenue.
With Atlantic City casinos and New Jersey’s racetracks closed for part of 2020, taxes from iGaming and online sports betting helped to offset losses. New Jersey collected $39.2 million (through November) from online sports betting. Nearly 92% of the state’s $5 billion sports handle was from online wagers.
Ironing out NY sports betting details
Even as impressive as New Jersey’s tax collections from online sports betting are, Cuomo sees larger numbers for his state. Rather than allow casino operators to conduct online sports betting, Cuomo wants a monopoly operator to run the show and share revenue with the state.
“And I’m not here to make casinos a lot of money. I’m here to raise funds for the state. So we have a different model for sports betting,” he said.
New York state lawmakers, however, do not agree with the governor’s approach. A bill introduced Thursday would allow four commercial casinos and three tribal operators to license two skins each. The bill proposes a tax rate of 12% for online sports betting revenue.
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A financial summary of the bill estimates $79 million annually for the state. Cuomo’s budget director suggested that a single-operator system could generate $500 million per year.
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Tax collections could drop
Should New York launch an online sports betting market, the state of New Jersey would see tax collections drop.
A sizable percentage of the online sports betting market includes New York residents who are currently crossing state borders to bet in New Jersey. A representative for FanDuel Sportsbook (New Jersey’s most profitable sports betting operator) estimated that 25% of online customers hail from New York. The state’s second-largest operator, DraftKings Sportsbook, did not provide a figure, but it would be reasonable to assume the percentage is comparable.
“The pent-up demand for legal sports betting in New York, and throughout the east coast, has led many New Yorkers to cross state lines for the purpose of wagering with New Jersey sportsbooks. The (FanDuel) sportsbook at the Meadowlands (Racetrack) has perhaps benefitted most from this phenomenon,” Bokunewicz said, before noting that one retail location grosses more than the eight Atlantic City casino sportsbooks combined. “This is an indication of the strength of the New York market.”
Because states such as New Jersey and Pennsylvania have already set up successful regulatory models, New York’s rollout of an online market should happen fairly quickly, she said. But, even with an aggressive launch by New York, the impact to New Jersey may not be immediate.
“Consumers have developed a relationship with New Jersey sportsbooks and may need at least a little persuasion to change over to New York-based books,” Bokunewicz said. “This transition period may be shortened of course by those operators, such as market leaders DraftKings and FanDuel, which will likely operate in both states. These operators could make the transition between states virtually seamless for their established customer base.”