NY Mobile Sports Betting Is Coming, But It's Far From Perfect

Apr 7, 2021 |
NY Mobile Sports Betting Is Coming, But It's Far From Perfect
The most noteworthy part of New York's mobile sports betting agreement is Gov. Cuomo’s call for the sportsbook operators to share with the state at least 50 percent, and preferably 55 percent, of profits.
Photo By - USA TODAY Sports
The most noteworthy part of New York's mobile sports betting agreement is Gov. Cuomo’s call for the sportsbook operators to share with the state at least 50 percent, and preferably 55 percent, of profits.
Photo By - USA TODAY Sports

The current state of the New York mobile sports betting situation can best be described via a quote from the classic '80s flick, Fletch.

“We’re in kind of a gray area.”

“All right, how gray?”

“Charcoal.”

Likewise, the shade of expanding mobile sports betting in New York.

Based on Tuesday’s news out of the New York Legislature, such expansion will be in Gov. Andrew Cuomo’s final budget in the coming days. But at this point, there’s not a lot of clarity beyond that, other than it was not the model desired by state Sen. Joe Addabbo and his peer, Assemblyman J. Gary Pretlow. And therefore it’s difficult to decipher what it means to the most important cog in sports betting: the bettors themselves.

Addabbo, who spoke at length with Covers in January about his goal for legislation and regulation to model itself on the successes of New Jersey and Nevada, noted on Tuesday that the agreement required much give-and-take from the Legislature and the Governor’s office. 

“We had a different vision of what mobile sports betting could look like,” Addabbo told Covers late Tuesday afternoon. “But if both sides dug in their heels, we wouldn’t have this agreement. We did a hybrid sort of a compromise, we worked out a deal.”

That deal will have the New York Lottery overseeing mobile sports betting, partnering with one or two sportsbook operators, chosen by the state via request for proposal—a bidding process.

If both sides dug in their heels, we wouldn’t have this agreement. We did a hybrid sort of a compromise, we worked out a deal.”
- Sen. Joe Addabbo

In January, Addabbo noted his legislation included each of the state’s seven licensees – four active upstate licenses, three currently inactive downstate – with two skins per licensee, meaning a robust market of potentially 14 sports betting operators.

This week’s agreement doesn’t go near that realm yet, though it might get a little closer. The deal has language that should allow for a minimum of four additional skins from those one or two operators, and potentially more skins beyond that in time.

The more noteworthy part of the agreement though is Gov. Cuomo’s call for the operators to share with the state a minimum of 50 percent, and preferably 55 percent, of profits.

What does this mean for N.Y. bettors?

Robert Walker, a longtime sportsbook industry insider and currently risk manager for US Bookmaking, isn’t convinced this is the best path for New York’s sports betting consumer.

“If the state gets involved, they’re gonna muck it up. If the Lottery gets involved, they’re not equipped to handle sports gaming. It’s outside of their wheelhouse,” Walker told Covers, while noting he’s trying to curb his skepticism. “There are more questions that need to be asked than we could possibly know right now. Is there transparency in the bidding, or is it just whomever writes the biggest check? But once you get the Lottery involved, you just expect the worst. If you don’t expect the worst, then you’re just being naïve.”

On the flip side, Addabbo expects the end product to more than speak for itself, while acknowledging the situation is very much a work in progress on the clarity front.

“There are certainly details that have to be worked out. But It’s going to be a product that New Yorkers can be proud of and will hopefully utilize,” Addabbo said. “We’d love to have it by the start of football season, but certainly this year, and running with a certain amount of efficiency come Super Bowl.”

If the state gets involved, they’re gonna muck it up. If the Lottery gets involved, they’re not equipped to handle sports gaming. It’s outside of their wheelhouse.”
- Robert Walker

But with the prospect of limited competition, will the product serve the consumer well? Will the pricing be competitive? New Jersey’s product certainly serves bettors well, as evidenced by the numerous New York City residents willing to pay tolls and such to cross over into the Garden State every day and make their bets.

“We’re asking New Yorkers to get out of their comfort zone, stop what you’re doing, stop going to New Jersey, start using us and stay with us,” Addabbo said, before addressing whether a limited marketplace could lead to predatory pricing, as is certainly the case in other Lottery-led sports betting ventures (read: Washington, D.C., et al). 

“It’s very easy and conceivable that if the product isn’t good, New Yorkers will revert back. Therein lies the issue. New York is in the unusual situation of being on the outside looking in. We’re playing catch-up, which is a tough position to be in. But if the end game is a really good product, we will equal and ultimately surpass sports betting in New Jersey.”

Addabbo noted that it won’t take long to know if the product is on the right path, and if not, course corrections can be made.

“New Yorkers are savvy, they’ve been doing this for over two years now (in New Jersey). So they’ll know right away if it’s good, and so will we,” Addabbo said.

Walker doesn’t dispute that, but he believes that’s giving too much credit to the size of the savvy niche, rather than recognizing what constitutes the overwhelming majority of the market: newcomers and very casual sports bettors.

“I definitely think New York will have a very sophisticated market, but there’s still 90 percent of the market that’s developing,” Walker said.

How much money will N.Y. mobile sports betting make?

Tied into that is the matter of Gov. Cuomo’s aggressive expectation of just how much money will flow into state coffers via sports betting. Buffalo News reporter Tom Precious on Tuesday tweeted out that the proposed New York state budget projects sports betting will inject $99 million into state revenues over the next fiscal year, ending March 31, 2022. Then $357 million in the fiscal year 2022, then a massive $500 million in Year 3.

However, Legal Sports Report’s Brad Allen blunted that prospect in a January piece. Allen delved into many elements, including a comparison by percentage with another single-operator market. And he determined that the state of New York would have to see $13.5 billion in handle – the total amount wagered in a year – if it hoped to recognize $500 million – half a billion dollars – flowing into state tax coffers.

New Jersey is coming off the best year ever of any state with legal sports betting, at about $6 billion in wagers, and as Allen noted, a significant portion of that money came from New York residents. The Empire State would have to more than double the best year ever, and the governor’s office believes it will do so in three years’ time.

But Addabbo remains optimistic, noting the importance of at least getting in the game, starting the race, rather than continuing to get lapped by his state’s neighbors.

“What’s good is that New York is finally entering the arena of mobile sports betting, so that we witness in the very near future the stoppage of money to New Jersey, to Pennsylvania and the illegal market,” Addabbo said. “What’s concerning? That’s a to-be-determined. If we find out the timeframe (to launch) bleeds into 2022, that would be concerning. And the end product has to be a credible product.

“But I’m comfortable enough that it’s workable to have a premier product in New York. That potential exists. We’ll work with the gaming commission to see to it that we have a great product for residents. The first variation isn’t the last one. When required, we’ll make changes.” 

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