30-second summary

• Governor Andrew Cuomo calls for legal sports betting at New York’s four upstate casinos
• These casinos had disappointing revenue figures for 2018
• Legal sports betting nearly came to fruition in 2018
• Legislators must resolve sticking points
• New bills are in the works

Governor says it’s time

Governor of New York Andrew Cuomo has called for sports betting to be legalized in the state during 2019. In his State of the State address on January 15, he said: “Let’s authorize sports betting in the upstate casinos. It’s here. It’s a reality, and it will generate activity in those casinos.”

Legislation dating from 2013 gives the four upstate casinos the future ability to offer sports betting. These casinos are the Resorts World Catskills, the Rivers Casino, Tioga Downs and the Del Lago Resort.

The 2013 law states that once sports betting is legal on a federal basis, then the casinos can offer it. The federal ban on sports betting was overturned in May 2018, after a Supreme Court vote on the issue.

Since then, many states have successfully legalized sports betting. Neighboring New Jersey has had great results to date with its sports betting offering. Seven states to date have now made sports betting legal – New Jersey, Delaware, New Mexico, Mississippi, West Virginia, Rhode Island and Pennsylvania. As many as 20 other states are planning to make a similar move in 2019.

Upstate casinos delay opening sportsbooks

Despite the four upstate commercial casinos in New York being technically able to offer sports betting, none have done so yet. All have performed in an underwhelming fashion since they were licensed in 2015. They have failed significantly to hit their revenue targets each year.

A major problem for the casinos is their locations. They are in the middle of nowhere and attract few visitors. Legal sports betting would create a lot of hype and excitement for them. If the casinos were the only locations in the state where legal sports betting is available, they would enjoy a significant uptick in visitor numbers.

While sportsbooks do not have the best margins, they will draw bettors to the casinos. Hotel occupancy rates will rise, as well as revenues from other casino games.

There seems to be a reluctance on their part to take the plunge. Instead, they are waiting it out to see if the state will first create a regulatory framework. In the meantime, the casinos are leaving a lot of potential revenue on the table.

New bills in progress

When federal sports betting ban was overturned, New York’s politicians quickly got to work on a sports betting bill.

A bill was almost passed in 2018, but fell foul of the legislative session deadline. A few key sticking points have postponed the draft legislation until the 2019 session.

One of the main issues was integrity fees for the major sports leagues. This would see a percentage of every bet on a league event be handed to the relevant sports league. There is a reluctance to put more pressure on sports betting operators, which already operate on slim margins.

The initial bill proposed an integrity fee of 2%, but the latest draft bills put this fee at around the 0.2% mark. This would go to the state Gaming Commission each quarter to be then claimed by the major sports leagues annually.The bill also proposes 8.5% tax on the gross revenues.

New York Assemblyman Gary Pretlow is also working on new legislation that would include an online element. He is confident that it is 90% likely that sports betting will be legalized in the state during 2019.

Problems lie ahead

Earlier this week, the Department of Justice changed its stance on online gambling. It reviewed the 1961 Wire Act and concluded that the restrictions apply to all forms of gambling. This could throw a spanner in the works for the online sports betting element of any bill.

Another hurdle is the new chair of the finance committee in the Senate, Senator Liz Krueger. Historically, she is opposed to gambling. She now has the power to stop the issue from even being placed on the agenda for the committee’s meetings. This will make much tougher for a bill to gain passage from the Senate.

There is significant demand for sports betting in New York. Many residents cross the border into New Jersey on a weekly basis to place sports bets via mobile sports betting apps.

Legal sports betting would see significant revenues going into state coffers. Estimates from the gambling research and consultancy firm Eilers and Krejcik Gaming project that legal sports betting for land facilities alone in New York could see an additional $532m in gross gaming revenue each year.