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New York Mobile Sports Betting: Winners And Losers

A complex situation surrounding New York mobile sports betting continues to evolve. The version of the mobile sports betting bill approved in the FY 2022 state budget leaves much room for interpretation.

The Empire State appears to be moving forward with a business model that puts the New York State Gaming Commission in charge of mobile wagering operations. The NYSGC will take bids on two mobile sports betting operator licenses, and those two operators will launch a minimum of four total sports betting skins.

The operating model approved in the state budget scores a win for Gov. Andrew Cuomo. For the many interests that opposed the Governor’s business plan, however, New York’s mobile sports betting market could fall short of its true potential.

Some of the winners and losers from New York’s approved mobile sports betting model include the following:

Winner: Governor Andrew Cuomo

Despite the State Legislature’s push for a casino-operated model, New York mobile sports betting will operate under Gov. Andrew Cuomo’s state-operated business plan.

Lawmakers advocating for legal mobile sports betting in New York found resistance from Gov. Cuomo for years. Cuomo changed his stance in January, but his vision for online sports betting significantly differed from what the State Senate and Assembly proposed.

Cuomo’s plan aims to allow the state to collect a bigger share of sports betting revenue. State Legislature chambers proposed a bill that allowed seven of New York’s land-based casinos to license up to two mobile sports betting skins.

That plan outlined a 12% tax on sports betting revenue and a one-time $12 million licensing fee from each brand approved for launch. Up to 14 different skins could have potentially operated in the state under that outline.

Under Cuomo’s model, the New York State Gaming Commission will take bids for two licenses, which will operate a minimum of four combined skins. Approved operators will pay a $25 million licensing fee, and sports betting revenue will be taxed at or above a 12% rate.

Time will tell if this model proves successful for the state, but Gov. Cuomo won the battle against state lawmakers and casinos.

Winner: New Jersey Casinos

New Jersey’s mobile sportsbooks produced more than $359 million in revenue in 2020. A statement from Gov. Cuomo’s office estimated that 20% of that revenue came from New York bettors traveling to the Garden State to place online sports bets.

New Jersey leads the nation in mobile sports betting revenue. The state’s business model allows Atlantic City casinos to each license up to three sports betting skins.

With more than 20 different online sportsbooks to choose from, New Jersey hosts the most competitive sports betting market in the US. Cuomo’s shift in his approach to sports betting legalization was significantly influenced by his desire to take back mobile wagering revenue from New Jersey.

Cuomo’s operating model severely limits competition among different sports betting brands in New York. New York City bettors will still enjoy convenient access to New Jersey’s robust selection of sports wagering platforms.

Even with mobile sports betting getting the green light in New York, New Jersey casinos can likely still look forward to plenty of action from New York bettors.

Losers: New York Bettors

New York bettors can look to two neighboring states as examples of flourishing mobile sports betting markets. Both New Jersey and Pennsylvania rely on state casinos to anchor their online sports betting industries, and both states offer a robust selection of platforms for bettors.

Limited to two operators and potentially just four skins, the diversity of the New York market will pale in comparison with its neighbors to the south.

New Jersey and Pennsylvania ended 2020 as the top two mobile sports betting markets in the nation by revenue earned. Both states include brands like DraftKings, FanDuel, BetMGM, William Hill, FOX Bet, and PointsBet, as well as house-branded mobile sportsbooks from state casinos.

The New Jersey market includes more than 20 different choices for online sports betting. Most of those brands aren’t going to make it to the New York market.

Astute bettors and recreational players alike might find it more appealing to take a trip to one of New York’s neighbors to place online wagers.

Losers: Sports Betting Operators

The complicated language of New York’s still-evolving sports betting bill calls for two operators and a minimum of four skins. The distinction between operators and skins isn’t clear yet, but it appears that only four sports betting brands will get to compete in the New York market in its early stages.

That limitation shuts many of sports betting biggest brands out of potentially the biggest market in the US. Seven sports betting brands already operate retail sportsbooks in partnership with New York casinos, and even some of those companies won’t get a piece of the mobile market.

US-leading sports betting markets like New Jersey and Pennsylvania see upward of 90% of overall sports betting revenue come from mobile wagering. The current language of the New York sports betting bill does allow the possibility of more skins in the future, but the current structure of the bill leaves several industry giants on the outside looking in.

Losers: New York Casinos

The Empire State hosts four commercial casinos and three tribal casinos that all currently offer retail sports betting. None of those casinos will enjoy the opportunity to roll out mobile sportsbooks, however.

Gov. Cuomo’s plan does call for the two approved operators to install servers at land-based casinos. That setup is required under state law, and the casinos chosen to host those servers will receive a $5 million housing fee from the operators.

The casino cut of the mobile sports betting market ends there. The Oneida Indian Nation, which governs an area of tribal land in central New York, has raised issue with the current language of the state’s sports betting bill.

The Oneida Nation owns exclusive gaming rights in an area of New York that covers approximately ten counties. Any kind of business plan that allows mobile wagering on those lands without cutting in the Oneida Nation would violate those gaming rights.

The current edition of the New York sports betting bill states that applicants for the two mobile sports betting licenses would receive extra consideration if they are partnered with New York Native American Tribes.

That provision doesn’t necessarily resolve the situation with the Oneida Nation, however. In any case, state casinos might end up as the biggest losers of all under Gov. Cuomo’s sports betting bill.

Too Close To Call: New York State

Will Cuomo’s business model result in more revenue going directly to the state? Under the outline proposed by the State Legislature, NY Sports Day projected that mobile sports betting would yield $1.3 billion in annual revenue.

Taxed at 12%, that revenue would have yielded $156 million in annual state tax collection. The one-time $12 million licensing fee proposed by the State Assembly and Senate would have produced another $168 million for the state.

Cuomo’s plan hikes the licensing fee up to $25 million but only allows two operators. The state will tax revenue at least 12%, but that rate could go higher when the final details are determined.

The Governor’s office projects that mobile sports betting will yield $500 million in revenue for the state by the third year of operations. It’s unknown how Gov. Cuomo arrived at that figure.

The $500 million projection could point to much higher tax rates or a revenue-sharing model that resembles the New Hampshire market.

If the state can collect $500 million a year on mobile sports betting, that has to be labeled a success. NY Sports Day projects that a model offering four sports betting skins could cut overall revenue in half, however.

The drop in overall revenue would mandate that the state takes a massive share of profits to hit $500 million in annual state collection.


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