NEW YORK CITY MINDSET
Euphoria, then dismay greet Andrew Cuomo's welcome of sports wagering. By David McKee
There's nothing like a monetary dosage of Covid-19 for some politicians to have a come-to-Jesus moment about gambling. When it comes to New york city State Gov. Andrew Cuomo, there has been a dramatic volte-face on the problem of online sports betting. While sports wagering exists in New york city, it is just on a small-scale, in-person basis. Cuomo has actually long opposed mobile betting on the grounds that it would require a constitutional modification. No longer. Now Cuomo says it just takes the Legislature's say-so, as he tries to find ways to plug Coronavirus-caused spaces in the Empire State budget. (Cuomo's even drifted the legalization of marijuana.)
In a statement revealing his change of mind, Cuomo wrote, "At a time when New York faces a historical deficit spending due to the ... pandemic, the current online sports betting structure incentivizes a big segment of New York homeowners to take a trip out of state to make online sports wagers or continue to purchase from black markets ... New York has the prospective to be the biggest sports betting market in the United States, and by legalizing online sports wagering we intend to keep millions of dollars in tax profits here at home, which will just enhance our ability to rebuild from the COVID-19 crisis." How many millions? $72 million by a conservative estimate.
New York might likewise claw back the 20 percent of New Jersey's sports-betting company that comes through the Holland Tunnel. That's $837 million in deal with right there, in what could be a multi-billion-dollar market. JP Morgan expert Daniel Politzer visualizes online sports wagering coming to market in 2023 and New york city garnering $1.25 billion in profits (not handle) within 2 years. (This presumes favorable tax rates and regulations, barely a provided.)
Cuomo would couple OSB suppliers to existing gambling establishments. FanDuel, DraftKings, FoxBet, bet365 and Bet Rivers already have boots on the ground. BetMGM and Twin Spires could get into the act if Cuomo's definition of gambling establishments is broadened to include racinos. Caesars Entertainment might likewise take part, as it is believed 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 share.
Getting Cuomo's wish passed in Albany is not a slam-dunk. The Legislature has been recalcitrant towards gaming growth in current sessions, in part due to the failure of upstate gambling establishments to meet their income projections. Whether or not Native American tribes have exclusivity will practically surely be prosecuted. Nevertheless, making a transform of Cuomo prevails over the difficulty that has stymied mobile sports wagering in the past. Still, sports betting stocks offered down on the news, mainly since Cuomo wants the state lottery game to administer OSB.
"I'm not here to make gambling establishments a great deal of money. I'm here to raise funds for the state. So we have a different design," the governor groused. "The implication existing would be a high tax rate, and that the traditional B2C operators possibly would not be able to enter the market," composed Credit Suisse analyst Ben Chaiken.
Also, Cuomo's official demand for propositions would just apply to 4 business gambling establishments, putting the three tribal ones on the outdoors looking in. "We interpret this as there being a single operator working with the state (probably at a raised tax rate), as we have actually seen with [DraftKings] in New Hampshire (50% tax)," Chaiken explained. If so, that would leave DraftKings, FanDuel, bet365 and Bet Rivers competing for one, all-inclusive license. Another significant player that might attempt to elbow its way in is Penn National Gaming's Barstool Sports, which might discover either the Oneida or St. Regis Mohawk people responsive.
All of this leaves Cuomo in the catbird seat. As significant OSB operators play musical chairs, understanding that just one will be seated when the music stops, the sky's the limitation on what they will have to be prepared to provide.
* Originally written February 2021 *