Looking at New York Sports Betting Efforts Heading into 2019

New York enters 2019 as one of the states most likely to legalize sports betting in the new year thanks to strong pro-gaming interests in the legislature and widespread support among existing casinos. The state failed to act on the opportunity in 2018, but the next year may see progress with most of the key stakeholders in place and on the same page.

An existing bill approved in 2013 legalized sports betting at the state’s four upstate casinos, but that effort has stalled out as regulators have put off issuing the regulations necessary for those casinos to begin taking wagers. That bill is also limited in scope as it leaves New York’s numerous tribal casinos out of the picture and fails to address mobile or online betting.

Moving forward, a new bill will likely be needed to bring sports betting to New York in 2019. The odds of a bill being passed this year are still far from certain, but multiple casinos have already reached agreements with major gaming companies in anticipation of that happening.

First, Betfair US and Tioga Downs reached an agreement back in June that would see FanDuel operate a sportsbook on behalf of Tioga Downs. DraftKings followed suit in July through an agreement with del Lago Resort & Casino. And in November, Bet365 and Empire Resorts reached a similar agreement.

All signs point to New York passing a sports betting bill sooner or later. With that in mind, we look today at the political outlook in New York and dig into the first sports betting bill to be considered this year.

Political Outlook for NY Sports Betting

When the New York legislature reconvenes on January 9^th, there will be some new faces in place that will play important roles shaping the outlook of NY sports betting over the next year. For the most part, it appears likely that the state’s previous pro-sports betting sentiment will carry over into the next session.

Legal sports betting in New York will lose its biggest ally in Senator John Bonacic, who announced last year he would not seek reelection. Senator Bonacic championed numerous online gaming efforts during his time as Chairman of the Racing and Wagering Committee.

The good news is his Chief of Staff, Andrew Winchell, told SBC Americas last month that Bonacic’s seat on the Racing and Wagering Committee will be filled by pro-gaming Senator Joseph Addabbo.

Senator Addabbo co-sponsored a bill filed by Senator Bonacic last year and has already pre-filed a new bill heading into the new legislative session. Senator Bonacic was a strong force for legal sports betting, but so far it appears Senator Addabbo will continue the previous chair’s pro-gaming legacy.

The bad news is that Senator Liz Krueger will be coming in as the new chair of the Senate Finance Committee. Senator Krueger, as SBC Americas reports, has voted against every online gaming bill to come before her over the past few years, including a sports betting bill filed by Senator Bonacic last year.

As the head of the Senate Finance Committee, Senator Krueger will have the power to singlehandedly derail any standalone sports betting legislation. Even she doesn’t have the votes to shut down any particular bill, she can simply refuse to put it up for consideration. That poses serious problems for any gaming legislation, which typically has to advance through the Senate Finance Committee due to its potential impacts on state revenue.

Her presence alone could derail any bottom-up efforts to legalize sports betting in New York. However, Governor Andrew Cuomo could potentially take a top-down approach by inserting sports betting legislation directly into the state budget.

While not an ardent supporter of sports betting, Governor Cuomo did say in a debate recently that he would support legalization “under the right places, under the right conditions.”

Senator Addabbo predicted last month that this is the route sports betting will take in New York. “I do think sports betting will be done in the budget,” he said after pre-filing a sports betting bill for the 2019 legislative session.

Previewing the First Sports Betting Bill of 2019

Senator Addabbo wasted no time in setting the tone for the next year with a bill prefiled last month to legalize in-person and online sports betting. S17 seeks to update the existing law that allows sports betting at New York’s four upstate casinos with additional clarity regarding online betting, tax rates, wagers on amateur sports, integrity fees and data mandates.

S17 appears to be the most league-friendly sports betting bill introduced at the state-level to date with provisions calling for integrity fees and data purchase mandates in addition to allowing leagues the opportunity to request certain types of wagers be prohibited. Bills approved in other states so far have rejected those demands.

Key points from S17:

• Online betting: Online and mobile betting approved for people 21 or older and physically present within New York state lines.
• Tax rate: Bill establishes a tax rate of 8.5%.
• Prohibited amateur events: Bill prohibits wagers on all collegiate sports events held in New York, on any event held elsewhere that involves a New York college and on all high school events.
• Integrity fee: Licensed sports betting operators shall pay an “integrity fee” of 0.20% the total of all wagers taken to the leagues. Leagues must demonstrate any money taken from integrity fees is actually put to use on integrity initiatives.
• Data mandate: Sports betting operators may use any data source they want for grading pre-game wagers but must purchase official data from the league for processing in-play wagers.
• Wagering restrictions: Sports leagues may request the NYS Gaming Commission to ban certain types of wagers due to integrity concerns. For example, the NBA may request NY sportsbooks not to accept wagers on the outcome of the next free throw if the league views that wager as being at high risk of corruption.

Overall, this bill looks a lot like SB 7900 introduced by Senator Bonacic in 2017. It even includes the same stated purpose, which is to update existing legislation “in the event of a change in the federal law which currently prohibits” sports betting. Obviously, that will need an update since the Supreme Court ruled PASPA unconstitutional last year.

The integrity fees and data mandates will not be particularly popular among certain pro-gaming groups such as the American Gaming Association, but at least the integrity fee has been scaled back from the initial 1% of betting handle down to 0.20%. Still, that would be a fairly significant tax considering sportsbooks typically only keep 5% of betting handle as gross revenue after paying out winning wagers.