Will New York see mobile betting next year?

New York’s push to pass mobile betting this year ultimately ended with a whimper. Opposition from Governor Andrew Cuomo meant the bill never even hit the Assembly floor for a vote. The state has approved betting in four upstate casinos and a handful of tribal venues, but that’s unlikely to make much difference to operators and consumers alike.

“My constituents are 150 miles away from these casinos,” State Senator and betting bill sponsor Joseph Addabbo recently said. “We’re watching tens of millions of dollars go across the border to New Jersey and I keep telling the governor’s people we have illegal activity going on here that we aren’t regulating – mobile sports betting.”

Mobile, of course, is the real prize, with 80% of New Jersey’s betting volume already coming via handheld devices. The state is also currently benefiting from New York’s continued lethargy, with FanDuel on record as saying around 25% of its online customers are actually from New York, with many acquired via the Meadowlands land-based book.

Rather than drive hundreds of miles upstate, New Yorkers will continue to cross the border to bet on mobile in New Jersey. “The greatest population center in the state of New York is given two unpalatable choices: bet illegally or go to New Jersey,” says Daniel Wallach, the founder of betting-focused law firm Wallach Legal.

Big deal

Despite the apparent failure of 2019, it was somewhat surprising then, just a few weeks later, to see The Stars Group announce a landmark deal with the Akwesasne Mohawk Casino Resort for betting and gaming market access, as well as the provision of retail sports betting operations.

Crucially, the deal gives Stars first skin access to launch online sports betting, poker and casino when the state legalizes the activities. And with market access options for New York fast running out, it’s certain the partnership didn’t come cheap for Stars.

The Akwesasne Mohawk Casino Resort

Bet365 after all paid some $50m for its market access/equity deal with Empire Resorts. So, does Stars know something we don’t? Is online betting and gaming legislation nailed on for 2020 in the Empire State?

The company itself declined to comment, but Wallach says mobile sports betting is now an “inevitability” in the state. “Whether it’s next year or the year after, I think we’re in a two to three-year window at the maximum,” Wallach says.

“I personally believe 2020 is the year it gets done. I have a strong conviction about that. This time next year, mobile wagering will be on the verge of launching in New York State.”

The main sticking point has always been the governor’s stated belief that mobile betting would require a constitutional amendment, but multiple New York law firms have now issued opinion to the contrary, essentially arguing that mobile is simply a delivery method of gaming and not a new gaming method in itself.

“I think the governor’s concerns were fabricated,” says one compliance exec at a US-facing operator. “I think he was wary after the debacle around DFS. I also think this time next year the governor probably doesn’t want to be governor anymore.

“The polls suggest that Donald Trump loses the election, and if you’re the governor, you’re looking to get out of New York and into some part of Biden’s or someone else’s administration as attorney-general or something.

“So, Governor Cuomo is more inclined to do something like gaming and expansion of gaming on his way out the door than in the middle of his time in office. Whether that’s right or wrong, I just think that’s the way he is looking at it.”

Skin in the game

That’s good news for the likes of FanDuel, DraftKings, bet365 and Stars Group, which have all secured access, and even William Hill should have access through its deal with Eldorado – now the owner of Caesars. But that could mean the number of ways into New York is fast running out, presuming the state sticks with the one-skin access it has put forward in prior years’ betting bills.

In a recent note, Eilers & Krejcik Gaming analyst Chris Grove said he expects New York to be open to as few as seven sports brands. “In the legal status quo, the only remaining New York market access opportunity would appear to be via the Seneca Tribe, which has not announced a sports betting partnership agreement,” Grove added.

That looks like great news for the Seneca tribe, which would hold the key to the largest potential market on the East Coast, but there’s also plenty of hope within the industry that the final NY legislation won’t limit access to one skin per license holder.

One US-facing operator, speaking on condition of anonymity, tells EGR: “For the state to truly maximize the revenue potential of sports betting given its size, it will need the four commercial and three tribal casinos to be running with multiple skins each. From the intel we receive, skins have never truly been debated as sports betting was always a long shot to get passed this year.”

That is expected to change next year, however, particularly with the examples set by states like New Jersey and Pennsylvania. There could also be more than just the seven casino licensees.

Back in June, New York State Senator Joseph Addabbo revised his ultimately doomed mobile betting bill to include in-person wagering at professional sports stadiums and arenas. Specifically, the amendment designated the likes of Yankee Stadium, Madison Square Garden and the Barclays Center as affiliates, or satellite locations where the casinos would be able to install kiosks and take bets.

That wouldn’t technically make venues license holders themselves, but it seems like a stepping stone towards that possibility in 2020 legislation, particularly when in light of other legislation being implemented around the country.

Illinois’ betting bill gave sports venues the right to operate mobile betting within a five-mile radius of the venue, and EGR understands Arizona is looking at legislation that would take that idea one step further and let sports franchises (and the Arizona tribes) operate mobile betting throughout the entire state.

“If Arizona does something like that, you better believe New York and the Yankees and the Mets and the Knicks and all those players are going to say, well, we want to do what Arizona did,” says the compliance exec. “So based on the landscape, I don’t know [single skin access] is that cut and dry because the story hasn’t been written yet.”

If the sports leagues have influence anywhere in the US, it is most pronounced in New York where they are headquartered. And giving them licenses could be one compromise for lawmakers and operators instead of including royalty fees or obligations for bookmakers to use official league data.

“The leagues are powerful in New York so it wouldn’t surprise me,” says David Isaacson, VP at Spectrum Gaming Capital. “In-stadium betting is a huge revenue opportunity, especially in those Manhattan locations,” Isaacson adds.

“I would expect, if they put money behind it, you’ll see it in future bills. It’s another powerful way to get fans in seats.” Broadly speaking, operators seem to think it is not a bad thing if sports teams and venues are brought into the fold this way; it precludes the need for integrity fees and it also brings their lobbying power into the fold.

“As the sports leagues have gotten smarter, they’ve been able to modify their position and be more supportive, especially in the mobile space,” the compliance exec says. “I think that’s also building political pressure.”

A rising tide?

If sports betting is seen as a fait accompli, then the picture is much more uncertain for online poker and casino. Isaacson, who is based in Manhattan, says generally the progression of betting legislation brings wider gaming expansion into the discussion, but he’s seen no such evidence of that in New York for 2020.

The push for only poker, for instance, certainly seemed to take a back seat in New York in 2019. As Addabbo said in an interview after the end of the 2019 session: “I thought sports betting was kind of a low-hanging fruit. I couldn’t even get the low-hanging fruit, and you want me to get a ladder to go for online poker?

“Forget about it. That ladder isn’t even for sale in our state.” The senator added: “Once we get mobile sports betting and let it breathe a little bit, seeing we can do it and protect the consumer while addressing gaming addiction, then we can look at what we can do with online poker. We would only venture into that area once we have proven ourselves in treating all the issues for mobile sports betting.”

To bring it full circle then, the heavy-lifting in the Stars Group deal with Akwesasne Mohawk will need to be done by Fox Bet rather than PokerStars. Of course, that was the way it was expected to be in the US and the reason for doing the Fox deal in the first place, so operators won’t be too miffed in the near-term if the bullish forecasts on sports betting prove to be correct.

With a population more than double that of New Jersey, even just one vertical opening up in New York could prove to be very lucrative indeed.