COVID-19 Relief Plan Shouldn’t Deter New York From Legalizing Multi-Operator Sports Gaming

March 24, 2021

President Joe Biden’s $1.9 trillion COVID-19 relief fund has eased the panic in many U.S. states feeling the pinch approaching the new financial year, New York more than most.

The pandemic has been a major contributor to state authorities projecting a “$59 billion of revenue shortfalls through 2022,” wrote Jimmy Vielkind of the Wall Street Journal, increasing the need for New York to assess all its options in how to generate more money.

Online betting may not spring to mind as an industry adversely impacted by the COVID-19 pandemic, but the shutdown of sports meant many plans to open shops in various states were shelved in 2020. The suspension of most American sports meant those losses were more negligible in the short term, but with the MLB betting season set to open and NCAA sports returning, failure to get ahead on legalization could result in missed revenue in the remainder of 2021.

Following that delay, a framework is finally in place to legalize sports betting ahead of New York’s 2022 Fiscal Year budget is due on April 1, but debate regarding how online sports betting should be run in the state leaves room for doubt. The Action Network’s Ryan Butler wrote in mid-March that New York State Senate and Assembly each passed this multi-operator framework, but that still doesn’t set in stone the format for how the state will, as expected, legalize online wagers.

In the wake of a once-in-a-lifetime pandemic affecting the entire globe, New York has been left with a crippling budget deficit valued somewhere in the region of $13 billion. It would be sensible to believe the coronavirus had a heavy influence in Governor Andrew Cuomo reversing his longstanding opposition to sports betting legalization this past January, though he would assign the state lottery in charge of the practice:

As things stand, bettors in New York can only legally place wagers in-person at one of the state’s tribal casinos. It’s common for residents to cross over into nearby New Jersey or Pennsylvania—where there is looser betting regulations—to place their bets, resulting in lost revenue for New York.

Market research firm Eilers & Krejcik estimated in February 2020 that New York was losing between “$203 million and $286 million” annually by refusing to usher in online sports betting. In that pre-COVID world, Cuomo responded to new calls for legalization as a means to quell the budget crisis, saying it wasn’t the right time for “creative although irresponsible revenue sources to solve a problem which doesn’t really exist.”

Fast forward one year and the problem really does exist.

A lottery model is a step in the right direction, organized through the New York Gaming Commission, but one that would drive down the competition and prevent multiple industry names like DraftKings, Caesars, BetMGM or William Hill from each offering their services. Instead, the state would auction its betting contract to a single provider, a blueprint that has worked to good effect in smaller states but could be limiting in a region as dense as New York. It’s been reported that sportsbooks would be taxed 12 percent on gross gaming revenue—a little more than the national average 10 percent—but the census appears to be that won’t scare operators from dealing.

This would likely result in many potential bettors still being distracted by nearby states that do operate those sportsbooks, many of which will offer better odds on all manner of events. Harlem World Magazine recently detailed the rising popularity of esports and its appeal as a viable sport to bet on, and a single-operator model may limit options of adopting other new wagering possibilities in the future.

According to Angelo Roefaro, press secretary for the United States Senator for New York and Senate Majority Leader Chuck Schumer, the COVID-19 relief bill would see all of the state’s deficit cleared, via the New York Post:

Even if that proves to be the case, it makes little sense for New York to remain behind their peers when the state could be raking in revenue on a scale closer to their neighbors.

The April 1 budget deadline adds a sense of urgency to discussions regarding how online sports betting will be structured, but with so much to gain in New York still recovering a huge impact during the pandemic, it’s the state that will miss out from failing to move with the times.

Photo credit: New York State Capitol, Albany, NY.

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