The house always wins, but for New York online sports betting, who will be the house?

ALBANY — New York appears very likely to become the 15th state to legalize mobile sports betting this year, as leaders from the Legislature and the governor’s administration have endorsed proposals to do so, but disagreement exists between the dueling proposals about how it would be run and how the […]

ALBANY — New York appears very likely to become the 15th state to legalize mobile sports betting this year, as leaders from the Legislature and the governor’s administration have endorsed proposals to do so, but disagreement exists between the dueling proposals about how it would be run and how the millions raised would be allocated.

Gov. Andrew M. Cuomo endorsed the legalization of mobile sports betting in his State of the State address, and the chairs for the committees in the Assembly and Senate that oversee gaming-related legislation have each introduced bills to do so. While agreement exists that the step of legalization should be taken to raise revenue that’s leaking out to the neighboring states of Pennsylvania and New Jersey that have already done so, that baseline agreement is the only common ground between the two camps.

“It’s not a question of if, but when,” said Sen. Joseph P. Addabbo, a Queens Democrat. “The question is: In what variation?”

Sports wagering is already legal in New York, legalized after the U.S. Supreme Court struck down a longstanding federal ban on the practice in 2018, but to place a bet you must go in-person to one of the state’s four casinos. The debate is over allowing New Yorkers to place bets online. In New Jersey, where the practice is legal, about $4.6 billion was wagered in 2019, with 84 percent coming from online bets, according to ESPN.

“I know individuals who work on Wall Street who, on their desk, put in all their bets, get on the PATH train, cross the border, place their bets, then go right back to work,” said Assemblyman Gary J. Pretlow, chair of the Assembly’s gaming committee. It’s closer for millions to cross the border to neighboring New Jersey than it is for them to go to the nearest casino in New York, he said.

The Legislature’s proposal, pushed by Addabbo and Pretlow, would create 14 licenses, called “skins,” that would be sold to businesses around the state to host servers for mobile sportsbooks that New Yorkers could access. Those businesses and the mobile sportsbooks would make money from the practice, and the state would collect revenue.

In the last year, New Jersey has raised about $45 million in public revenue from sports betting, according to Cuomo’s budget director, Robert Mujica. With the state facing a multi-billion dollar budget shortfall this year, motivation is high from all sides to find sources of cash. The total amount bet in New Jersey last year, called the “handle,” was $6 billion.

Because New York is twice as populous as New Jersey and has so many popular sports franchises, Addabbo said when the market matures, he thinks the state could bring in at least twice the amount as neighboring states, and the sale of the 14 licenses at $12 million each could raise $168 million in the first year.

Hosting online sports betting, and getting a cut of it, is promising news for casinos that have struggled over the last year with COVID-19, Addabbo said.

“They look at mobile sports betting in terms of hope,” Addabbo said. “(Cuomo) makes this whole thing about the lottery division, and there’s a meltdown in the industry.”

The governor’s proposal, crafted by Mujica, would retain direct state control over the skins through the gaming commission and state lottery. Since all that’s required to run a mobile sportsbook is setting up a server, Mujica said, the state can easily cut out the middleman — casinos — and sell the skins directly to the mobile sportsbook, pocketing a much larger portion of the earnings as public revenue.

“We should have a discussion about the economics of casinos. But what you’re saying then is we should use sports wagering not to benefit the budget, not to benefit the state budget, but instead to give the money to casinos. But then we should just say that.” Mujica said of the legislative proposal, which he estimated would save 90 percent of the profit of online sports betting for casinos and leave 10 percent for the state.

As we all know, the house always wins, but specifically, the house would win here a profit of about 6.5 percent, Mujica said.

The way the business of sports betting works, he said, is that the a vast majority of the total handle is returned to bettors who win their wagers, and the house keeps about 6.5 percent. If online betting is legalized, after a few years, New York’s handle might be $14.5 billion, Mujica said, leaving about $1 billion in pure profit for the house — whether the house is the casino or the state.

“The question is, where does that billion go,” Mujica said.

He estimated that by boxing out casinos completely, the state could take in as much as $500 million per year when the market matures after a few years.

Expansion of sports betting is opposed by the Catholics, the Coalition Against Gambling in New York and the Institute for American Values who say that it could lead to more damaging gambling addictions among New Yorkers.

Gary Greenberg, a political advocate and former state Senate candidate, has been pushing for the legalization of mobile sports betting for several years. He is a shareholder in Vernon Downs Casino Hotel, which would presumably bid for one of the skins under the legislative proposal.

“You cannot have the state competing with all New York casinos that are financially hurting. The (governor) was wrong to say he is not here to make money for casinos,” Greenberg said. “He is in office to help all businesses who are suffering and following his COVID restrictions.”

“The framework of the governor’s proposal is good,” he said. “Let’s get final details ironed out and get mobile sports betting up and running in New York.”

Ironing out those details — number of skins, exact split of the profits, how exactly the funds would be allocated — will likely take months and is subject to a great deal of further negotiation. The key players in the negotiation are already staking out positions. Senate Majority Leader Andrea Stewart-Cousins, when asked about the governor’s endorsement of sports betting expansion in the State of the State, said: “The conversations had in our conference have been around Sen. Addabbo’s proposals.”

And Mujica said that expansion of sports betting would be far less likely if the administration’s proposal is not followed: “They’ve proposed bills in the past that haven’t been advanced. I think that this year if you’re just going to get, if it’s just $45 million for the state and $500 million is going to casinos, I think it’s not as likely. If you’re talking about a significant amount of revenue that can be used … I think the odds change significantly.”

Pretlow and Addabbo said their committees will vote out the bills within the next few weeks, but the matter will likely be taken out of their hands and handled as part of the broader conversation over the state’s budget, which is supposed to be passed by April 1.

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