It’s now or never for an effort to authorize mobile NY sports betting in the Empire State.
Assemblyman Gary Pretlow pushed his bill through his own committee this week, sending it down a treacherous path. The committee on Racing and Wagering voted 8-3 Wednesday to advance A 6113 to the next checkpoint in Codes.
A matching effort from Sen. Joseph Addabbo recently cleared the parallel committee he chairs in the upper chamber.
Coupled with the governor’s comments to WAMC that passage is “possible” this year, this bit of movement has bettors feeling optimistic. Frankly, though, not much has changed.
Step 1: Advance the NY sports betting bill
Pretlow controls the flow of traffic through the committee he chairs, and his group was never going to present a real hurdle. Advancing the bill is not a bad sign, of course, but it was mostly a formality.
A split right down the party line makes it even harder to infer anything meaningful from the committee vote. Pretlow and his seven Democratic colleagues voted in favor of passage, while the three Republican members voted against.
Meanwhile, Democratic Assemblyman Carl Heastie may represent the strongest source of pushback in the entire legislature. Heastie is the Speaker of the Assembly and a vocal opponent of previous efforts to expand gaming and gambling laws.
The first step is clear, but it was the easy one. And really, if these bills weren’t going to leave the sponsors’ nest now, then when?
Step 2: Ease the governor’s concerns
Pretlow and Addabbo might have sealed the NY sports betting deal months ago if not for opposition from the chief executive.
Gov. Andrew Cuomo‘s legal team maintains constitutional reservations about the ability of the legislature to authorize online betting. Passing a follow-up bill in 2019 would require an understanding that online betting does not represent an unconstitutional expansion of gambling that would require a voter referendum.
The sponsors presented legal opinions to support their position, but whether or not they swayed Cuomo depends on who you ask.
Depends on whom you listen to …
Here’s Pretlow this week, as optimistic as ever: “I think we finally convinced them that those constitutional questions are invalid.”
And conversely, here’s the governor’s spokesperson, Rich Azzopardi: “Our position on constitutional concerns has not changed.”
Those concerns led Cuomo to exclude revenue from sports betting in his budget for the upcoming fiscal year. While he hasn’t expressly ruled out online wagering, the governor’s public focus shifted to larger issues like marijuana legalization and rent regulation.
“I think the time is short, and the list is long,” Cuomo said in the interview. “So I would counsel the legislative leaders: Get the priorities done, because these priorities are not easy.”
Step 3: Make the bill more palatable
The proposals contain some structural flaws which, if repaired, might ease their path to passage.
The bills include a $12 million license fee, which represents the highest price tag in the country. That title currently belongs to Pennsylvania, which just approved the first PA sports betting apps for testing this week.
Although the NY market has more potential than its neighbor to the south, an eight-figure license could limit the number of participants.
Time to pony up or hold your horses?
Speaking of participation, the horsemen are not keen on being left out. The current bills would only permit commercial and tribal casinos to offer online sports betting, and the single-skin provision would further stifle the competition needed to maximize revenue to the state.
And then there’s the integrity fee, which the sponsors have rebranded as a “royalty fee” in their bills. Such a provision, by any name, that hands sports leagues a clean cut of gambling revenue is unprecedented in the US and potentially a detriment to the economics of sports betting.
Presuming the NY market is worth $1 billion in revenue as analysts project, leagues would be in line to skim around $40 million from the state every year. Lawmakers should strip provisions that enrich these billionaire corporations at the expense of the state and its struggling casino operators.
If Pretlow and Addabbo need a proven model to draw from, they need look no further than New Jersey.
Step 4: … Profit?
The NYS Gaming Commission is working to finalize rules for retail betting, but that’s as far as regulators can go under the existing law. Online wagering certainly won’t happen this year, and the enabling legislation still looks like an underdog to pass.
Expectations from revenue need to be tempered accordingly.
Online platforms account for more than 80% of the total NJ sports betting activity next door — a notable portion of which comes from folks slipping across the border to wager on their smartphones.
During a recent hearing in Albany, an executive for FanDuel Sportsbook testified that a quarter of its accounts are registered as New Yorkers.
If implementation remains limited to retail-only betting in the Empire State, analysts forecast less than $50 million in annual gaming revenue. It looks like that could be the reality when the legislature adjourns, though.
Pretlow and Addabbo have just three weeks left to drum up support before the session ends on June 19.