Can New York’s mobile sports betting industry meet its full potential under Gov. Andrew Cuomo’s business plan? The battle between New York State Legislature chambers and Gov. Cuomo, both with competing and very different visions for online sports betting, went Cuomo’s way in the end.
The State Assembly and Senate both proposed a business model allowing state casinos to license and operate mobile sports betting apps. Both arms of the New York Legislature outlined a plan that allowed the state’s seven casinos to operate up to two online sports betting skins each.
That model would have brought up to 14 different online sportsbooks to the New York market.
NY Sports Day projected that with 14 brands competing for market share, mobile sports betting could have brought in $1.3 billion in annual revenue. Factoring in a proposed 12% tax rate and $12 million licensing fee for each operator, that projection would have resulted in $156 million in annual tax revenue and an additional $168 million in licensing fees for the state.
Gov. Cuomo’s plan takes the casinos out of the equation, instead installing the New York State Gaming Commission at the center of the state’s mobile sports betting industry.
Buffalo News Albany Bureau Chief Tom Precious announced in a Tuesday Twitter post that the latest version of the state budget includes plans for “at least two betting platforms” and a minimum of four operators for mobile sports betting in New York.
The text from Precious’ tweet reads as follows:
“NYS budget projects mobile sports betting will bring the state $99M this FY ending 3/31/22, $357 the next and $500M by year 3. RFA to be issued for at least 2 betting platforms & min of 4 operators. Platforms that partner with Indian tribes to get extra pts in bidding process,” posted Precious.
Can The New Hampshire Model Work For The New York Mobile Wagering Market?
Gov. Cuomo wants the state to retain a more significant share of mobile sports betting revenue. The Governor’s vision for online sports betting could resemble New Hampshire’s mobile wagering market.
The New Hampshire Lottery functions as the state’s only mobile sports betting operator, licensing DraftKings Sportsbook as the only mobile sportsbook available to New Hampshire bettors. DraftKings won a bidding war among sports betting brands to win New Hampshire’s one available license.
The DraftKings bid outlined a revenue-sharing business model, which sees the state take 51% of gross revenue. Gov. Cuomo’s proposed sports betting model will likely play out similarly, with the NYS Gaming Commission taking bids for mobile sports betting licenses.
With DraftKings Sportsbook as New Hampshire’s only choice, mobile sports betting generated $23.6 million in revenue in 2020. The state’s 51% revenue share ended up at just over $11 million after adjustments.
Of the six New England states, only New Hampshire and Rhode Island offer legal mobile sports betting.
New England’s 15 million population and rabid sports fanbase hold great potential for online sports betting. New Hampshire’s lottery-based system and lack of competition among sports betting brands significantly reduces potential earnings for the state, even at a 51% share.
Casino-Backed Business Model Sets The Gold Standard In New Jersey
New Jersey led the way as the nation’s top sports betting market throughout 2020. Powered by a booming mobile market, New Jersey produced nearly $400 million in sports betting revenue last year.
Of that total, $359.4 million came from mobile sports wagering revenue. New Jersey gaming laws allow Atlantic City casinos to license up to three sports betting skins each.
Adjusting that $359.4 million figure to match New Hampshire’s population, that translates to $52 million in annual revenue. New Jersey hosts a 9-million population, while New Hampshire plays home to 1.36 million people.
Since the first wave of mobile sports betting apps launched in New Jersey in August 2018, the state’s industry has expanded to include more than 20 different sports betting brands. New Jersey’s casino-operated sports betting model allows industry giants like DraftKings, FanDuel, BetMGM, William Hill, BetRivers, and several others to market sports betting to New Jersey and surrounding areas.
That operating model boosts New Jersey into the No. 1 spot in the US mobile sports betting economy. A significant portion of New Jersey’s $400 million sports betting revenue figure comes from New York bettors making the trip to the Garden State, where they have a multitude of sportsbook options at their disposal.
Potential Lost Revenue To New Jersey
The diverse New Jersey market compels sportsbooks to offer competitive lines and bonuses for bettors. New York lawmakers aim to keep in-state bettors from traveling to New Jersey by legalizing online wagering in the Empire State.
If New York options are limited, however, in-state bettors might choose to place bets in New Jersey anyway. Retail sports betting is already legal in New York, with FanDuel, DraftKings, BetRivers, and bet365 powering sportsbooks at land-based casinos.
Those four brands would presumably be first in line to land online sports betting licenses under Gov. Cuomo’s model. If a maximum of four sports betting licenses are awarded, however, brands like BetMGM, William Hill, PointsBet, WynnBET, and many others could end up shut out of the New York market.
All of those brands offer their services in New Jersey, and bettors loyal to those brands could continue to travel to neighboring New Jersey to enjoy those options.
NY Sports Day projects that a state-operated model with four sports betting skins could produce $650 million in annual revenue. That figure cuts the $1.3 billion revenue projection with 14 skins in half.
According to Precious’ report on the latest version of the New York budget, the state projects that the final approved sports betting model will earn $500 million in third-year revenue for the state. The final details on tax rate and revenue share between sports betting operators and the state have yet to be released.
As the New Jersey-New Hampshire comparison points out, however, the road to maximum revenue needed a casino-operated model, allowing several sports betting brands into the New York market.