Cuomo Endorsement Removes Key Mobile Sports Betting Hurdle In New York

There was recent evidence that New York Gov. Andrew Cuomo’s icy mobile sports betting views were thawing. According to the New York Daily News, he’s prepared to make mobile sports betting a central part of his policy proposals in next week’s State of the State address.

“New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis,” Cuomo told the NYDN.

As for the impetus of his about-face, look no further than the gaping hole in the state’s budget caused by the COVID-19 pandemic.

“At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets.”

Mobile sports betting won’t be a panacea, but there’s no quick fix for the budgetary problems New York and other states are facing. Sports betting is one piece of low-hanging fruit lawmakers can pick as they cobble together a plan to plug the budget hole. Marijuana, also mentioned by Cuomo back in December being another.

Mobile Sports Betting Isn’t a Done Deal

Cuomo wasn’t the only roadblock to mobile sports betting in the Empire State.

As was the case with online poker, the New York Assembly didn’t want to play ball. There’s been a lot of finger-pointing over the years, so where the blame truly lays is anyone’s guess.

The most likely culprit is standard New York politics. The legislature didn’t want to pass a bill the in-party governor would veto, which would likely trigger an override vote. With Cuomo on board, it will be interesting to see if the barriers in the Assembly disappear or if there are some underlying issues (anti-gambling sentiment and stakeholder disagreements) preventing passage.

Legal Challenges Loom

Another consideration is the potential for a lawsuit. One of Cuomo’s concerns with mobile sports betting was constitutional, as New York requires a constitutional amendment to expand gambling. Proponents argue that since retail sports betting is already legal, online isn’t an expansion of gambling, rather it’s a new delivery channel.

Not everyone shares that view, and there’s a strong possibility that a mobile sports betting law gets challenged in court. The state is already defending its 2016 daily fantasy sports on the same grounds, and a similar case involving sports betting would be costly, likely cause delays in a launch, and far from a slam dunk win.

The Opportunity

A lot of the chatter centers on the number of New Yorkers who drive south to bet in New Jersey. But if money is the reason, New York should emulate its other southern neighbor, Pennsylvania.

It would be folly for New York to mimic New Jersey’s license fee and tax structure. The Empire State could charge operators whatever it wants for access to the market, and they’d say yes faster than Kramer accepting free coffee for life from Java World.

The best way for New York to get what it wants from mobile sports betting is to create an open market with hefty licensing fees (Pennsylvania and Illinois had no issue charging $10 million a pop) and tax rates in between New Jersey’s 13% and Pennsylvania’s 36%. Of course, the industry will lobby for lower burdens.

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