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Black markets and the future of mobile betting in New York

By - 2 January 2020

Sports betting has gone live in the state of New York, but the future of mobile sports betting remains uncertain. While green lighting sports betting in casinos has been relatively straightforward, online sports betting is more problematic as it could require a constitutional amendment. In addition, mobile betting does not have the backing of Governor, Andrew Cuomo.

Current rules allow for in-person betting at the Del Lago, Rivers, Resorts World Catskills and Tioga Downs casinos as well as all tribal casinos. However, unlike in New Jersey, wagers can not be made online. Sports betting launched in the Rivers Casino & Resort in Schenectady in upstate New York in July. Shortly afterwards, FanDuel Group opened a sportsbook at Tioga Downs in Nichols.

Senate Racing Committee Chairman, Joe Addabbo, who was present at the Rivers Casino & Resort opening, lamented the loss of millions in lost revenue to New Jersey. Mobile rules needed to be changed the senator said: “I’m glad we’re breaking ground on sports betting, but it would’ve been nice to have the mobile component. But it’s a baby step.”

As New York casinos and racetracks continue to struggle online sports betting revenues in New Jersey have continue to rise. In October it was revealed that for the third time in four months, total bets in NJ sports betting beat the performance of Nevada’s sportsbooks with mobile betting dominating handle.

In addition, now that the National Football League (NFL) season is underway, sports betting revenues are on the rise. The first week of the NFL season meant significant increases in sports betting activity at New York’s casinos. In total, the four casinos recorded gambling profit of $900,000 in the NFL’s first week, compared with $345,000 in the previous week, according to numbers filed with the New York Gaming Commission. Sports betting in the state generated $2.3m in revenue in September – a 175.3 per cent increase compared to August.

Mobile betting on sports has always been a contentious issue in the state. While state lawmakers hammered out the US$175bn budget in the state capitol, passing a raft of new measures in April, online sports betting was not included in the final package.

In May, a number of state lawmakers, led by Sen. Joseph Addabbo, introduced bill S17 that would allow mobile betting run by New York casinos. The bill passed the Senate, but faced an uphill battle in the Assembly. In June, in a joint statement from Sen. Joseph Addabbo and Assembly Racing, Gaming, and Wagering Committees Assembly member J. Gary Pretlow announced that they had amended their legislation to address concerns expressed regarding the initial proposal.

The amendments would enable OTBs and New York Racing Association (NYRA) facilities to begin mobile sports betting via kiosk at the same time as the four upstate casinos already authorised to offer legal wagering. VLTs, Racinos, and arenas would be phased in afterwards. In addition, the amendments strengthened protections to address problem gambling, particularly among individuals under the age of 30.

“Billions of New Yorker’s dollars are being wagered on sports in the black-market. By enabling the mobile sports wagering component, we will be able to capture a majority of this illicit practice while further protecting our consumers,” said Assemblyman Pretlow. “Senator Addabbo, our staff, and I have been working continuously to craft legislation that is considerate of all major stakeholders.”

The bill, however, was not put on the floor of the house before the end of this year’s regulatory session, which ended in June, as assembly Speaker Carl Heastie is opposed to the issue and Governor Cuomo would not have signed it on the grounds that the inclusion of mobile may also require a constitutional amendment. The governor argues that the 2013 law that authorises the four upstate casinos to offer sports betting “doesn’t open the door for sports betting anywhere else but the land-based casinos. If we want to expand it beyond the land-based casinos, including online, you need a constitutional amendment. And that’s a separate conversation.”

Both Pretlow and Addabbo say an amendment is not necessary as the affiliate model would be constitutional. Addabbo has even gone as far to say that the governor’s office is using the constitutional amendment as an excuse to prevent mobile expansion. Indeed, the governor has stressed his opposition to mobile gambling more than once arguing that revenues from sports betting would not have a huge impact on state coffers.

So what are the chances that the state will legalise mobile betting? In the short term: very slim. In June, the state Gaming Commission said it would commission a study examining every aspect of gambling in New York. However, the commission told consultants in September that it would not award a contract based on the proposals it received.

The state Commission issued a new request for proposals, with the planned study not due for completion until June 1, 2020. The next six-month legislative session starts in January, meaning that lawmakers would have a very short amount of time in order to analyse the new study and then reach a decision.

Governor Cuomo has already stated that the market study will play a pivotal role in how gaming is regulated in the state. In July, he said: “You look at the numbers and the data on gaming, obviously more people lose in gambling than win, and if there’s not a significant economic benefit to the state or a region of the state, than I would rather not do it, and that’s what the research has to show.”

This means that mobile sports betting in the state could be a long time coming. Addabbo and Pretlow would like to see laws enacted next year without the need for a referendum, yet the timing of the new report comes close to the end of next year’s legislative session.  In addition, the New York state Legislature could adjourn early in order to give members time to campaign before primary elections in June. Meanwhile, both potential sports betting customers and the state will continue to lose out.

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