The chatter around mobile NY sports betting is certainly more positive than from Monday, though there are still plenty of questions.
According to Assemblyman Gary Pretlow, New York sports betting will expand to mobile in “some form.” Pretlow suggested the worst-case scenario for this year is agreeing to something that’s closer to Gov. Andrew Cuomo‘s plan than the one proposed by Pretlow and Sen. Joe Addabbo Jr.
Agreeing to Cuomo’s plan could leave the state with just one sports betting operator, Pretlow feared. More than one could be accepted but ultimately it would be up to the New York State Gaming Commission to make the call.
Pretlow said Thursday afternoon he is not giving up yet:
The budget may be winding down, but we’re still pushing for my plan. Multiple skins, the competitive market approach is recognized as the best model around the country.
— J Gary Pretlow (@JGPretlow) April 1, 2021
Why does Cuomo want closed mobile NY sports betting?
Unfortunately, there have not been many details made public about why exactly Cuomo wants to go with his lottery-style model. That could be because more pressing issues have occupied his attention.
He did, however, mention in January that he is worried about making the state money and not the casinos:
“We want to do sports betting the way the state runs the lottery where the state gets the revenues. Many states have done sports betting but they basically allow casinos to run their own gambling operations. That makes a lot of money for casinos but it makes minimal money for 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.”
Cuomo is basing his plan off New Hampshire sports betting, which handed DraftKings Sportsbook a mobile monopoly in exchange for 51% of the revenue. His office expects mobile betting to eventually result in $500 million a year to the state.
Based on New Hampshire’s 2020 results, about 3.7% of its $293 million in handle turned into tax revenue. A similar return rate would require $13.5 billion in handle for New York to get $500 million a year.
That is not impossible, but it also does not seem likely anytime soon. Sports betting in New Jersey just barely broke $6 billion in handle for 2020 and it might be a conservative estimate to say 20% of that came from New York.
Legislative model predicts $79 million annually
That would be with 14 skins through the state’s four commercial casinos and three tribal operators. It also does not include the $168 million upfront that would come from licensing fees. Addabbo has also pushed for three additional downstate casinos, which would bump total available skins to 20.
Pretlow and Addabbo suggested taxing sports betting revenue at 12%, which suggests $658.3 million in annual revenue based on those tax estimates. Using the average US sports betting hold of 7.1%, New York would need $9.3 billion in annual handle to get those tax dollars. That figure would climb even higher using Nevada‘s historical 5.4% hold as a model.
Handle nowhere near that now
New York is the only publicly reporting state that doesn’t say how much is actually being bet each month at its four commercial casinos. Even with generous estimates, though, that number is not very high.
Consider NFL betting season from September through February. The four casinos had just $13.6 million in revenue over the six-month stretch.
Using the 7.1% hold average, that suggests $191.5 million in total handle. It’s likely much lower, though, as retail-only states tend to have higher holds:
- At Mississippi’s average hold of 11.5%, New York’s handle would be $118.5 million.
- Arkansas’s average 13.8% hold would make it $98.8 million.
- Delaware’s average hold of 15.5% would bring that total handle down to $87.9 million.
That’s less than some of the bigger states like Nevada, New Jersey, and Pennsylvania take on football in just one month.
Potential tribal issues in play for NY sports betting?
A report late Thursday afternoon from Albany suggests another snag could challenge NY sports betting negotiations:
— Tom Precious (@TomPreciousALB) April 1, 2021