A regulatory model that could limit the sports betting market in Ohio and New York is under consideration in both states.
Senate sponsors of an Ohio sports betting bill surprised the industry when they mentioned their latest draft would include just one skin per casino/racino in the state. That dropped from three each in September and two each last month.
Sports betting in New York is legal, of course, but the state has long dragged its feet on legalizing mobile. That could change as early as this year, said Senate sponsor Joe Addabbo this week during a Betting on Sports America conference panel. Given Gov. Andrew Cuomo‘s opposition to mobile betting in the past, Addabbo said he thinks it’s best to start negotiations off with one skin per property.
While there was hope for Ohio to legalize this year, both states now appear to be longshots.
Ohio sports betting odds look longer
Ohio Sens. John Eklund and Sean O’Brien might have wiped out chances of legalizing sports betting this year with their latest draft.
The two touted a draft in which “not one” sports betting proponent got everything they asked for, Eklund said. That’s especially true for betting operators, which praised the expected multi-skin market in written testimony to the Senate.
That includes multiple skins, which Eklund said he left out to avoid a proliferation of gambling in the state:
“We have it on good authority from people that I trust that multiple brands can be a real problem going down the line. So, we’re proposing that we stick with one online brand per location, with the idea that if it becomes important or beneficial to the people of the state of Ohio to add more brands, that can be done with a simple switch of the statute down the road.”
Requests for comment from Eklund on what that “real problem” of multiple brands could be went unreturned.
Ohio sports betting draft widens gap with House
The new proposal could have introduced too much of a disparity between the House and Senate to get sports betting legalized by the end of 2020.
Dan Dodd, VP of Government Relations at ZHF Consulting, said he was taken aback by the changes.
“When you’re talking about a gap widening in a lame-duck session when you’re hoping it’s instead being bridged, I think it makes it more difficult to get something done in the last week or two,” Dodd said.
It’s also won’t be easy to add more licenses in the future, Dodd suspects. Once you legalize a single-skin model, Dodd said, you increase the number of companies that are invested in such a model, which will make lobbying for additional skins that much harder.
“It would take years, I think, to raise the number” of skins, Dodd said.
Gural: not sure why smaller sportsbooks ‘even exist’
Jeff Gural has one of the more interesting positions in sports betting. He operates the Meadowlands Racetrack in New Jersey and owns Tioga Downs in New York, so he sees firsthand the huge disparity between the two states.
About $300 million was wagered online through the Meadowlands’ partners in October, $100 million of which came from people living in New York, Gural said on a Betting on Sports America panel. New Jersey set a US record with $803 million in handle for October.
Even though Gural has multiple partners in New Jersey, he prefers just one skin per property in New York.
“Personally, I think we’d be better off with one skin because I honestly don’t understand, looking at the numbers in New Jersey, why some of these companies even exist, they do so little business,” Gural told LSR.
That being said, more than one skin isn’t a deal-breaker for him at this point.
“We might have opposed [multiple skins] last year but this is an emergency right now and we’ve got to do what’s in the best interest of the state and try to get them out of this crisis,” Gural said.
Surprised New York still without mobile
Gural is partnered with US market leader FanDuel Sportsbook in both states. But without mobile, the business at Tioga Downs is far from what the Meadowlands does.
“Very little [handle], not very much at all,” Gural said. “Very disappointing. I think most of the people up there bet illegally or go to Pennsylvania.”
He said he never expected to be in this position when he won a full New York casino license in 2016:
“I thought that we’d be able to convince the legislature that this made sense. It’s not a question of whether you believe sports betting is good or bad. All you’re doing is switching it from an industry where people are either betting illegally or driving to New Jersey or Pennsylvania to an industry that’s taxed and regulated by the state.
“Hard for me to believe anyone would think it’s better to have it the way it is now. That’s crazy. I just don’t think they understand how many people are betting illegally.”
Not everyone agrees with one skin in New York
Assemblyman Gary Pretlow, who’s been fighting for mobile New York sports betting on the other side of the chamber from Addabbo, wants more than one skin.
“I know some of the casinos are advocating just one skin because they’re greedy, they think that they can be their own quote-unquote bookie, I don’t think that’s the case,” Pretlow said during the BOSA panel. “You don’t have to use all [available skins], nothing that says you have to do it but at least you have the opportunity to do it.”
Addabbo told LSR he thought about what would be most marketable in the negotiation process. He’s not opposed to allowing more skins if that’s what gets the bill passed, he added.
“This is a major point for the bill so we’ll see,” Addabbo said. “I’ll have my discussions with my team, I’ll have my discussions with Gary Pretlow, and let’s see what we can advance.”
Other details more important than skins?
Just because a state is available to enter doesn’t mean every operator is interested.
The best case study on this is Tennessee, which only has four live operators with at least four more pending.
Tennessee isn’t capping licenses, meaning anyone that’s approved could run a mobile sportsbook. But the state also requires operators to hold a minimum of 10% annually – which is unprecedented in the US – along with a 20% tax rate, $750,000 annual license fee and an official league data requirement.
Virginia’s model is much more operator friendly. Sportsbooks pay $250,000 for a three-year license and are taxed at 15%.