After three years of high-stakes negotiations, intense lobbying efforts and input from a bevy of professional sports leagues headquartered in Midtown Manhattan, New York leaders included the framework of a mobile sports betting deal in the state’s 2022 Fiscal Year budget.
Brokered on Tuesday, following marathon discussions that lasted until about 4 a.m., the deal will effectively legalize online sports wagering in the Empire State. The draining 11th-hour negotiations pave the way for New York to potentially begin offering mobile sports betting in September for the NFL season, though the timeframe for a formal launch date has not been set. In January, when Gov. Andrew Cuomo completed an abrupt U-turn on his position on mobile sports betting, the three-term governor declared that New York could become the largest market in the nation.
Around 4 p.m. ET, Gov. Cuomo’s office released a statement that state and legislative leaders had reached an agreement on the Fiscal Year 2022 New York State budget, which Cuomo described one day earlier as the most ambitious, complicated one of his tenure as governor. The General Assembly must now vote to accept the budget. The final budget accomplishes several major legislative priorities, according to the statement, including a record $29.5 billion in aid to schools, $29 billion in public and private green economy investment, and legalizing mobile sports betting.
Mobile sports betting is slated to appear in the state’s Article VII Revenue bill, sources told Sports Handle, which is expected to receive a vote at some point this week. Sen. Liz Krueger, chair of the Senate Finance Committee, indicated earlier on Tuesday that she had hoped to a budget, estimated at $212 billion, before midnight Tuesday.
Cuomo did not address issues related to mobile sports betting during a 30-minute public appearance in New York City on Tuesday afternoon, but sports betting champion Sen. Joseph Addabbo, Jr. was happy to address it.
“This is a product that now New Yorkers can stop going to Pennsylvania, or doing it illegally online,” Addabbo told Sports Handle. “They can do it safely and credibly within their state, so it’s a win for the people of New York today.”
RFP process 3a5x6t
Under the deal, the New York Lottery will oversee mobile sports betting operations, Addabbo noted. As previously proposed, the New York State Gaming Commission plans to issue a request for proposals (RFP) to select one or more providers to offer mobile sports wagering across the state.
Here are the key aspects of the deal, based upon interviews Tuesday with Addabbo and Assemblyman J. Gary Pretlow, chair of the State Assembly Racing and Wagering Committee. Addabbo serves as the chair of the Senate Racing, Gaming and Wagering Committee.
- Under a revenue-sharing agreement with the state and the selected provider(s), New York will likely seek a minimum of 50% of gross gaming revenues (GGR) from the selected online sportsbooks. Cuomo, through the commission, could seek as much as 55% of the provider’s GGR from online sports betting proceeds in New York.
- There will be a minimum of four mobile sports betting skins, or brands in the marketplace. There is no ceiling on the number of skins, Pretlow said, and the total will amount to the number of skins the “market can bear.” While Cuomo thought it was important to have “credible providers” to partner with the state, according to Addabbo, the Queens senator focused his efforts on negotiations regarding the total number of skins available in the market. Addabbo is pleased with language in the bill that created a floor of four skins, noting that initial discussions called for fewer than four.
- A one-time fee of $25 million will be charged to mobile sports betting platform providers.
- Mobile servers will be placed on the floors of New York commercial casinos to satisfy constitutional concerns, with some revenue headed to the casinos, Addabbo said.
- Funding of around $6 million a year will be added for new addiction program money.
- Funding of about $5 million will be provided to youth sports, with a greater percentage earmarked to education, according to Addabbo. “Our position is simple, if New York legalizes mobile sports betting, then 5% of the state tax revenue from mobile sports betting should be allocated for grants to nonprofits that provide sports programs to youth from low-income families,” a contingent of 49 New York State Youth Sports leaders wrote in a letter of advocacy to Cuomo dated March 26.
- There will be a preference, but not a mandate, for official league data. “League data, to me, is very accurate. The fact that it is preferred would help — this is obviously the work we do post-budget,” Addabbo said.
A monopoly on mobile sports betting? 4o3ka
This is the million-dollar question, or more precisely the $500 million dollar question, that industry experts pondered on Tuesday afternoon in the wake of the release. Although Cuomo initially expressed a preference to sole-source the mobile sports betting contract to a single company, according to multiple sources, language agreed upon from the three-way deal calls for two providers. Addabbo stressed that he had yet to see the “final, final language” on Tuesday afternoon. As with most matters that occur in Albany during budget season, no agreement is final until an enacted budget is signed into law.
What the agreement on mobile sports betting in New York looks like: pic.twitter.com/LkaLhwClxg
— Robert Harding (@RobertHarding) April 6, 2021
The so-called state-run model in New York is patterned after one in New Hampshire that had been referenced repeatedly during the negotiations process. In New Hampshire, the state lottery awarded DraftKings an exclusive contract for online sports betting in exchange for 51% of the company’s GGR from its online sports betting channel. When outlining the process on Monday, Robert Mujica, Cuomo’s budget director, appeared to indicate that the state could contract with multiple “entities” rather than a sole provider, as is the case in New Hampshire.
“I don’t think the New Hampshire model is working,” Pretlow told Sports Handle. “It’s not working for them. It’s similar to the Oregon model that’s not working. I’m a free market kind of guy and wanted to open it to the world.”
In any event, Pretlow is not sure how the revenue from the system will filter back to the state. Cuomo indicated that the “platform will take the bulk of the handle,” Pretlow said, possibly resulting in a 60/40 split between the platform’s market share with the remaining skins.
“Personally, I don’t see it happening,” Pretlow said.
If the commission opts to select two platform providers, New York will receive an additional one-time fee of $25 million, according to the revenue bill released on Tuesday night.
As a condition of licensure the commission shall require that each platform provider authorized to conduct mobile sports wagering pay a one-time fee of twenty-five million dollars. Such fee shall be paid within thirty days of gaming commission approval prior to license issuance and deposited into the state lottery fund for education aid.
The overarching dispute on skins leads to the next point of contention. It is unclear if the platform provider, the New York Lottery, or another entity will be responsible for awarding the skins. Theoretically, if a smaller operator is required to pay a high rate to the platform for access in New York, it will be difficult for the sportsbook to offer competitive odds, Pretlow explained. While the intricate model may work in certain areas of Upstate New York where competition is sparse, it may be less effective in New York City where consumers are less than 10 miles from the New Jersey border.
“I just think there are too many questions that are open in this,” Pretlow said, adding that he doesn’t see a major sportsbook operator surrendering market share to a competitor through an additional skin.
(k) “Mobile sports wagering platform” or “platform” means the combination of hardware, software, and data networks used to manage, ister, or control sports wagering and any associated wagers accessible by any electronic means including mobile applications and internet websites accessed via a mobile device or computer;
(l) “Mobile sports wagering operator” means a mobile sports wagering skin which has been licensed by the commission to operate a sports pool through a mobile sports wagering platform;
(m) “Mobile sports wagering licensee” means a platform provider and a mobile sports wagering operator licensed by the commission;
Tribal sports betting w4x38
As anticipated, a number of tribal gaming operators, most notably the Oneida Indian Nation, appear to be cut out of the deal. While Mujica stated Monday that Cuomo’s istration favored a deal that allowed the Oneidas to take part in mobile sports betting, the tribe took issue with the state’s position in a strongly worded rebuttal. If the Oneida Nation is unable to offer mobile sports betting, thereby excluding a 10-county region in Central New York, the tribe and area leaders have warned that the state could lose up to $70 million in annual settlements payment. Legal action could follow.
The Oneida Indian Nation offered a compromise on mobile sports betting that addressed all issues related to its exclusivity. This compromise was approved by the State Senate and Assembly, and ed by Indian and commercial casinos in New York. It appears that the State nevertheless is rejecting that compromise. We will review the final language, but we have serious legal doubts about this legislation and the impact it will have on Central New York. We regret that the State is not trying to resolve these issues cooperatively, and we remain open to discussing an outcome that works for the State, the Nation and our entire region.–Statement from the Oneida Nation in response to Gov. Cuomo’s press conference on April 5
Late Tuesday after Cuomo announced the deal the tribe released a statement:
Oneida Indian Nation statement on mobile sports betting deal tonight in NYS. The central NY tribe this week said looming sports deal would result in breach of 2013 deal with NYS for exclusive gambling in its region & halt of its $70M in payments to NYS/localities. pic.twitter.com/OgIscx4zy7
— Tom Precious (@TomPreciousALB) April 7, 2021
Pretlow indicated that during the post-budget process there may be a point-scoring system for determining the entities that are awarded skins. The tribal groups, he said, would be given additional points during the process. Pretlow likened the system to a civil-service exam, where a veteran will receive five extra points.
- Downstate casino licenses: The sides did not resolve issues in potentially expediting three downstate licenses that could net $1.5 billion in fees for the state. Addabbo is still optimistic that the state will “recognize some revenue” from those licenses for the current fiscal year.
- Thoroughbred racetrack and professional sports venues also appear to be excluded from the bill.
- Kiosks inside non-casino venues: Pretlow pushed for the kiosks, but said that he could not convince Cuomo to adopt the plan. Cuomo appeared concerned that the kiosks could lead to legal challenges, Pretlow said.
Earlier this year, Cuomo projected that mobile sports betting would bring the state $49 million in Fiscal Year 2022, a partial year, before a step-up to $357 million by Fiscal Year 2023. Online sports wagering is not projected to generate $500 million until Fiscal Year 2025.
On Wall Street, DraftKings shares rose moderately while shares of Penn National Gaming closed at $104.09, down 2.75%. Penn National, which has a strategic partnership with Barstool Sports for sports betting, fell more than 6% on the news, before rebounding late in the session. Shares of dMY Technology Group, Inc., a special purpose acquisition company that has a deal in place to take sports betting data provider Genius Sports public, surged on Tuesday.
Cuomo has continually reiterated that he is not looking to casinos, but to raise revenue for the state.
“We don’t need the casinos as a middleman,” Cuomo said during a Monday press conference. “My position is the state should generate revenue directly.”
