Political Differences and Budget Shortfall Delay the Legalization of Online Sports Betting in New York 

March 22, 2021

Online sports betting in New York remains in a state of temporary inactivity and is weeks before a crucial deadline to determine if the state would be the largest market legalizing mobile wagering.

The legislature has not made much progress since introducing bills in January. Sportsbook operators and lawmakers hope Gov. Andrew Cuomo’s finalized fiscal-year budget clarifies the situation ahead of the 1st April deadline.

The majority of Democrats in the legislature are in favor of mobile sports betting. The problem lies between Cuomo’s limited-operator proposal and lawmakers’ multi-operator model.

Cuomo’s grip on his state’s Democratic party politics is equivalent to total government control that helped oppose mobile sports betting for years. Initially dismissing mobile sports betting as untenable, Gov. Cuomo upended online sports betting in January when he announced his support towards it.

Despite a projected $15 billion budget shortage, Gov. Cuomo did not seem undisturbed by online sports betting’s constitutionality.

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Later, Cuomo’s plan of single-model operator astonished the stakeholders. 

The law maker’s plan would allow as many as fourteen mobile licenses between New York’s three Native American gaming tribes and four commercial casinos. Specific professional sports places and off-track betting facilities were also allowed to open retail sportsbooks.

Opposition from the Stakeholders

Under the governor’s plan, BetRivers sportsbook would bid against the city’s other commercial retail partners, DraftKingsFanDuel, and Bet365

To get a chance to launch the sportsbook and online casino in New York, MGM partially acquired the city’s properties. Manhattan-based Barstool Sports also expressed interest in this market.

The governor’s plan is similar to New Hampshire’s online sportsbook license bidding process that created a de facto monopoly after DraftKings outbid competitors. This excluded bettors’ access to other legal sportsbooks. It also required DraftKings to offer the country’s highest tax rate in trade for exclusive market rights.

Sports Betting in the United States of America

How the Budget Affects the Approval

The New York governor said his plan would generate $500 million in yearly tax revenues at market maturity. According to the opposition, the multi-operator model could generate nearly $300 million in licensing fees between the fourteen sportsbooks alone, on top of the expanded gross revenue taxes inherent in a competitive market.

According to industry observers, online sports betting would make the city the highest-grossing sports betting market. With fewer than half New York’s population, neighboring New Jersey currently holds that title, with an estimated twenty percent coming from New York City.

New York’s budget shortfall will be alleviated with the help of the federal Covid-19 relief bill. However, lawmakers are still searching for new revenue opportunities. Mobile sports betting, while fiscally small, is an integral part of the budget.

Future Action

The elected officials in New York are trying their best to meet a mandated budget deadline. Stakeholders hope Gov. Cuomo’s plans will come ahead of the budget in the future.

Even implicit endorsement for a multi-operator model from the governor’s office could quickly push sports betting forward. Otherwise, lawmakers seem unlikely to consent to Gov. Cuomo’s plans.

In the meantime, several of Cuomo’s fellow party members have called for his resignation following his response to the pandemic-related nursing home deaths and multiple sexual harassment allegations. 

Cuomo’s resignation days before the legally mandated deadline would likely further rush the complexities around the state’s $200 billion yearly budget.

This means New York’s online sports betting hopes still depends on a solution between two different visions.

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