After years of false starts, failed Assembly bills and opposition from the governor’s office, New York has moved forward on a bill to give online casino sports bettors the opportunity to wager on sporting events online from any part of the state.
History
Over the years, numerous attempts have been made to make casino gambling and sports betting available to New York residents. A bill passed in 2013 legalized welcome bonus casino and sports betting but only at up to seven casinos. The state subsequently authorized four retails casinos in upstate New York. Now, after a long delay, New York has amended its State Constitution to legalize various types of sports betting via mobile betting. Lotteries and horse racing will continue as they had before the 2013 bill.
In 2013 the New York legislature legalized sports wagering but only “from persons physically present” in one of the authorized casinos. Online sports betting was not legal since the online casino bettors wouldn’t be physically present at an authorized casino when making the bet.
All attempts to introduce online sports betting were stymied because changing the state constitution, said Governor Andrew Cuomo, could only be done by a voter referendum.
That opinion was challenged by sports betting proponents who wrote, in a 2020 New York Law Journal op-ed, that the legislature does indeed have the authority to authorize online sports betting as long as the servers where the bets are physically “housed” are located at casinos which have already been authorized to operate sports betting under the state constitution.
New pushes for a revision in the governor’s previous stance came from two sources. For one, the COVID-19 pandemic created a financial crisis in the state’s budget, leading the state to start investigating every possible avenue by which to raise funds.
For another, neighboring New Jersey has been operating a successful sports betting industry – including mobile betting – since the Supreme Court ruled that such betting was legal in 2018. New Jersey bookmakers can only take bets from people who are physically located in New Jersey so every day, thousands of New York bettors ride the train to the first NJ train stop or drive over the border to the first NJ road stop to place their bet and then return home.
New York Sen. Joseph Addabbo Jr., who has been trying to get sports betting up and running in New York for years, says that 25% of New Jersey’s sports betting income is generated by New Yorkers who place their bets in the Garden State.
Governor Andrew Cuomo, explaining his turnaround, explained, "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."
Framework
The regulatory framework of the new law focuses on “platform providers” who will operate the mobile sports wagering infrastructure. The State Gaming Commission will be able to choose two providers (based on a competitive bidding process) and the number of platform providers may increase if the Commission decides to do so. Operators will pay license taxes plus a one-time $25 million fee. Licenses may be renewed every 10 years.
Each bettor may have one account and may only place their bets while located in New York State. Marketing ads will be closely monitored to ensure that there are no promotions that mislead players. Wagering will be limited to bettors aged 21 and up.
Getting Started
New Yorkers won’t be able to download an app and start making wagers until late 2021 at the earliest. By July 1st the state will issue a request for platform providers to apply to enter the competitive bidding process. That package window will be open for 30 days, after which the state’s Gaming Commission will have 150 days to select the initial two providers.
The process could be speeded up if the Gaming Commission makes its decision more quickly but most observers believe that sports betting in New York won’t be up and running until December 2021 or early 2022 at the earliest. That means that the infrastructure will almost certainly not be in place in time for the college and NFL football seasons.
There’s also the question of the amount of time that a platform provider would need to start taking bets in the state. In New Hampshire, it took DraftKings a month to begin accepting bets once it had been chosen to spearhead NH’s online sports betting platform.
Clarity
There are also some wrinkles that still need to be ironed out in the new legislation including the question of the difference between the minimum of four “mobile sports wagering operators” that are required to partner with the platform providers and the providers themselves.
It seems that the platform providers can be any type of entity such as a tribal casino, a tech company, a sportsbook operator or a state casino. However, the potential platform providers, when submitting their bid package to the gambling commission, must list 4 “skins” – mobile sports wagering operators – with which the platform will partner. Can a skin be a provider platform as well as a skin? Who chooses the skins, the platform provider or the Gambling Commission? How will this limit punters’ choices of gambling platforms?
Tribes
New York tribes, which operate the state’s upstate casinos, are watching carefully to see how they will be brought into the online betting plan. Gov. Andrew Cuomo has acknowledged the need to include the tribal nations in sports betting operations.
The FY 2022 revenue bill for the state also mentions the inclusion of the tribes in mobile sports betting through special consideration from the Gaming Commission or inclusion in platform providers’ bid packages. How this will happen is, as yet, unclear.
The Oneida Nation has already expressed its displeasure. The tribe released the following statement:
“We are disappointed and believe the legislation is a step backwards, as the State apparently expects the Oneida Indian Nation to bid for the right to offer mobile sports betting within our own 10-county zone, for which the Nation already pays the state and localities about $70 million per year for gaming exclusivity pursuant to our 2013 Settlement Agreement. The Nation had worked hard with multiple parties to negotiate a compromise that worked for everyone, and was approved by the Assembly and the Senate, and endorsed by all of the tribal and commercial casinos. It is unfortunate that the State has chosen instead to take such an unbalanced approach that will unnecessarily hurt our region. We remain open to discussing workable solutions when the state is prepared to do so.”
