NY Online Sports Betting Budget Details Finalized, But Questions Abound

It appears online sports betting is coming to New York. That is if it doesn’t get tied up in legal challenges first.

Mobile sports betting will make the New York budget and the details have been finalized, according to Assemblyman Gary Pretlow.

Pretlow was part of negotiations between the legislature and the executive branch. He tells playin-ny that lawmakers will agree to the state-run online sports betting model pushed by Gov. Andrew Cuomo.

The one concession lawmakers were able to get into the language was an assurance that there will be at least four sports betting apps in the state.

“It will definitely be done as part of the budget,” Pretlow said. “The budget will be finalized this week, possibly as soon as today.”

Details for New York mobile sports betting

Here are the main details of the mobile sports betting agreement, as provided by Pretlow and confirmed with Sen. Joseph Addabbo Jr.:

• The New York Lottery will oversee mobile sports betting.
• Through a request for proposals process, the New York State Gaming Commission will choose at least two operators as the mobile sports betting partners for the state.
• Mobile sports betting partners pay an initial license fee of $25 million.
• Cuomo wants operators to share a minimum of 50% of the profits with the state, ideally 55%.
• The licensees would then pick other platform providers to have skins. “It could be eight or 20 skins, but we agreed on no less than four.”
• Commercial casinos would locate servers within their facilities, satisfying constitutional concerns that sports wagers are placed at casinos. Pretlow said “probably all four” casinos would participate in this way.
• Much of the legislative language centered around problem gambling and consumer protections will make the budget, including the creation of a fund with $5 million going to youth sports.
• Expresses preference but does not mandate the use of official league data.
• Does not include a royalty or integrity fee to sports leagues.

How will it work for the state’s online sports betting partners to choose competitors for skins?

“Don’t ask me how it would work,” Pretlow said. “I don’t know.”

Tribal gaming concerns not addressed

Running mobile sports betting through the state lottery could leave Native American tribes on the outside looking in.

Oneida Indian Nation, one of three gaming tribes that operate casinos in New York, stated this week that the governor’s proposal could violate its exclusivity zone established as part of the 2013 move for commercial casinos, opening it up for the tribe to cease making $70 million in annual gaming  payments to the state.

“The tribes are not happy,” Pretlow said. “They don’t like the governor’s proposal because they’re actually cut out. We at least convinced him that, when they do an RFP for affiliates, there would be a points methodology instituted and tribes will be given preferential treatment. If that sounds like gobbly-goop, that’s what it was.”

Addabbo said that lawmakers will work with the New York State Gaming Commission to ensure tribal involvement in the process to come.

“I think that’s an issue we’ll have to work on post-budget,” Addabbo said. “Right now we have a framework, and we’ll be working with the governor and administration to flesh out the details so the picture becomes clear to everybody.”

Will Cuomo’s New York sports betting model succeed?

The problem with limiting the participants in sports betting apps is that the losers aren’t satisfied with the result, which leads to legal uncertainties being drawn out in court. And that could push back the start of mobile sports betting in New York.

Pretlow expects the governor’s proposal to face lawsuits.

“I would challenge it if I was the Native Americans. I would challenge it even if I was a potential affiliate. Everyone hates the governor’s plan except the governor and the budget director. I don’t understand why they’re so weighted to this program, but they are so this is what we have to live with. As legislators, we’re not able to change the governor’s budget. We can only take away, we can’t add anything. He can just say, ‘I’m not negotiating, do my budget or take stuff out,’ and that’s it.”

Ultimate, New York lawmakers decided it’s better to try the governor’s model than wait another year to discuss mobile sports betting. If they removed it from the budget, it’s unlikely they could have passed a standalone bill later this session and gotten it past Cuomo.

“This gets New York into the arena of mobile sports betting,” Addabbo said. “Now we’ll see if we can figure out a product that New Yorkers are willing to try.”

Downstate casinos considered but not yet expedited

The budget stops short of expediting issuance of downstate casinos licenses. Instead, it will include the executive budget language instructing the Gaming Commission to issue a request for information (RFI) on possible casino sites and operators in the New York City area.

“Here’s the issue with downstate casinos,” Addabbo said. “There’s a lot of concern about placement in certain areas of the city, so we reverted back to the request for information to basically see what’s out there. There again, our work begins after the budget. We’ll work with the Gaming Commission on a timeframe for the RFI and language to expedite these licenses.”

In its budget proposal, the Senate wanted to fast-track authorizing three casino licenses for downstate New York at a minimum of $500 million apiece.

When New York approved commercial casinos in 2013, it did so in a way to spark economic development in the upstate region. Four casinos opened in 2016 got a seven-year head start over three downstate casinos. But upstate casinos would welcome an earlier issuance because it means they would be reimbursed a prorated portion of their initial fees.

Following the RFI, Addabbo believes downstate casino licenses could happen next year. But that will only advance the existing time line by one year.

“It’s a foundation on which to build upon,” Addabbo said. “Mobile sports betting and the start of downstate casino licenses, these are things to build upon.”