NEW YORK CITY MINDSET
Euphoria, then dismay greet Andrew Cuomo's welcome of sports betting. By David McKee
There's nothing like a monetary dose of Covid-19 for some politicians to have a come-to-Jesus moment about betting. When it comes to New york city State Gov. Andrew Cuomo, there has been a dramatic volte-face on the issue of online sports betting. While sports betting exists in New York, it is only on a small, in-person basis. Cuomo has long opposed mobile betting on the premises that it would need a constitutional change. No longer. Now Cuomo states it just takes the Legislature's say-so, as he looks for ways to plug Coronavirus-caused gaps in the Empire State budget. (Cuomo's even floated the legalization of cannabis.)
In a his modification of heart, Cuomo wrote, "At a time when New york city deals with a historical budget deficit due to the ... pandemic, the present online sports wagering structure incentivizes a large sector of New York homeowners to take a trip out of state to make online sports wagers or continue to patronize black markets ... New york city has the potential to be the biggest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax income here in your home, which will only strengthen our capability to rebuild from the COVID-19 crisis." The number of millions? $72 million by a conservative price quote.
New York could also claw back the 20 percent of New Jersey's sports-betting company that comes through the Holland Tunnel. That's $837 million in handle right there, in what could be a multi-billion-dollar market. JP Morgan expert Daniel Politzer imagines online sports betting concerning market in 2023 and New York gathering $1.25 billion in profits (not manage) within two years. (This assumes beneficial tax rates and policies, barely a given.)
Cuomo would couple OSB providers to existing gambling establishments. FanDuel, DraftKings, FoxBet, bet365 and Bet Rivers already have boots on the ground. BetMGM and Twin Spires might get into the act if Cuomo's definition of gambling establishments is expanded to consist of racinos. Caesars Entertainment might also participate, as it is thought to have a contract with the Seneca Nation's Turning Stone casino. DraftKings, on the other hand, can leverage its relationships with the New York Giants (football), New york city Rangers (hockey), New york city Knicks (basketball) and Madison Square Garden to construct market share.
Getting Cuomo's wish passed in Albany is not a slam-dunk. The Legislature has actually been recalcitrant towards video gaming growth in recent sessions, in part due to the failure of upstate gambling establishments to fulfill their profits projections. Whether or not Native American people have exclusivity will almost undoubtedly be litigated. Even so, making a convert of Cuomo prevails over the hurdle that has stymied mobile sports wagering in the past. Still, sports betting stocks offered down on the news, primarily since Cuomo desires the state lottery to administer OSB.
"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," the governor groused. "The ramification existing would be a high tax rate, and that the conventional B2C operators potentially wouldn't have the ability to get in the market," wrote Credit Suisse analyst Ben Chaiken.
Also, Cuomo's official ask for proposals would only apply to 4 commercial gambling establishments, putting the 3 tribal ones on the outdoors searching in. "We interpret this as there being a single operator dealing with the state (presumably at an elevated tax rate), as we have seen with [DraftKings] in New Hampshire (50% tax)," Chaiken explained. If so, that would leave DraftKings, FanDuel, bet365 and Bet Rivers vying for one, all-inclusive license. Another significant player that could attempt to elbow its method is Penn National Gaming's Barstool Sports, which might find either the Oneida or St. Regis Mohawk tribes responsive.
All of this leaves Cuomo in the catbird seat. As major OSB operators play musical chairs, knowing that just one will be seated when the music stops, the sky's the limitation on what they will need to be prepared to provide.
* Originally composed February 2021 *