When Cuomo pivoted on mobile sports betting at the start of the year, the three-term governor boldly proclaimed that New York could emerge as the largest market in the nation. But the market dynamics may change with Cuomo set to leave office Aug. 24 after announcing his resignation last week in the wake of sexual harassment allegations.

Hours earlier, the New York Gaming Commission revealed that 14 companies submitted applications to enter the state’s competitive bidding process for mobile sports betting ahead of an Aug. 9 deadline.

Several companies still submitted bids, despite grave concerns about a revenue-sharing plan that contains a 50% tax floor on an operator’s gross gaming revenue (GGR) from mobile sports wagering. The companies continue to fret over whether it is possible to turn a profit with such a hefty tax rate.

The commission is responsible for awarding contracts to a minimum of two platform providers and a minimum of four sports betting operators upon the completion of the bidding process, as detailed in a 130-page Requests For Applications released last month. Although the commission is scheduled to award the licenses near Christmas, the exact date for rollout has yet to be determined.

On Tuesday, a panel of top industry lobbyists and prominent New York politicians tackled issues related to New York’s launch of online sports betting at The Racing and Gaming Conference At Saratoga. Asked if Cuomo’s resignation will complicate the remainder of the process, Pretlow argued that it might instead help matters.

The race to $1B in sports betting GGR
Pretlow, chairman of the Assembly’s Racing, Gaming, and Wagering Committee, delivered the comments from The 1863 Club, a three-story trackside facility at Saratoga Race Course, the nation’s fourth-oldest thoroughbred racetrack. Midway through Saratoga’s 2021 campaign, Belmont Stakes winner Essential Quality and Pegasus World Cup champion Knicks Go have already captured graded stakes at the nation’s most prestigious meet. Located on the clubhouse turn of the historic track where top thoroughbreds galloped by, it was the site for panelists’ lively discussion on the future of mobile sports betting in the Empire State.

Upon its inclusion in the fiscal year budget, Cuomo projected that mobile sports wagering would bring New York state $357 million in Fiscal Year 2023 before stepping up to $500 million at maturity, two years later. A legislative bill, sponsored by Pretlow and Sen. Joseph Addabbo Jr., estimated that mobile sports betting would generate tax revenue of $350 million on an annual basis.

Some operators are even more bullish about potential revenue. An analysis released by a Kambi-led consortium that includes five mobile sports betting operators (Caesars Sportsbook, Rush Street Interactive, PointsBet, WynnBet, and Resorts World) projects that a market with nine operators would generate $892.5 million in state tax revenue at a tax rate of 51%. A limited-operator model with four companies in the marketplace would produce about $808 million in tax revenue for the state, according to the projections.

Another estimate from a consortium led by FanDuel projects that the state would generate $600 million in GGR over the first full year of mobile sports betting, before increasing to $1.3 billion by Year 3. FanDuel‘s projection (preferred tax rate of 50%) is based on the assumption that only four companies gain access to the New York market, with DraftKings, BetMGM, and Bally Bet the others gaining licensure.

New Jersey bettors wagered $578.7 million on sports in July, translating to gross revenue of $55 million for the books at a 9.5% hold, the largest hold rate for the state since January 2020. While New Jersey’s year-to-date hold percentage hovers around 8%, a win percentage north of 6% can be difficult to attain. Over the last 20 years, the hold percentage in Nevada has eclipsed 6% six times, including a rate of 7.89% in 2006 — the only time the hold topped 7%.

In the 2020 U.S. Census, New York ranked fourth nationwide in population at 20.2 million, more than double that of New Jersey at 9.29 million. Since New Jersey generated a handle of just under $10 billion for the 12 months ended July 2021, a target of $20 billion in annual handle for New York at market stability is reasonable, said David Isaacson, senior vice president at Spectrum Gaming Capital. Isaacson gave a presentation on Spectrum’s comprehensive New York gaming market study at Tuesday’s panel.

“This is New York, a top sports wagering market. There are big gamblers here and they are among the most valuable customers for sports betting operators — New York is very likely to exceed $1 billion in sports wagering revenue at stabilization,” Isaacson told Sports Handle.

By Matt Rybaltowski