Mobile Sports Betting in New York May End Up Modeled After Pennsylvania: ANALYSIS

Helming, herself, wasn’t entirely on board, as she expressed concerns about racinos being left out. Still, her comments help show where lawmakers stand. Both bills passed without a no vote in their committees last week.

With New York’s fiscal budget year starting on April 1, lawmakers and the Cuomo Administration have just more than two months to reach a consensus. Where may they end up when all is said and done?

The answer may lie in Pennsylvania.

At the 2019 Global Gaming Expo, former New Jersey Gov. Chris Christie went off on his neighboring state to the west. He called Pennsylvania’s sports betting system

Pennsylvania requires a high barrier to entry with a $10 million license fee. In addition, it also features a 34 percent tax on revenues from sports betting.

New Jersey has made headlines in the latter months of 2020 as sports betting exploded nationally, thanks to the return of major professional and collegiate sports from the COVID-19 pandemic. Just last month, it established a record-setting $996.3 billion handle from sports betting.

New Jersey’s totals are obviously helped by New York lacking mobile. It s estimated that New Yorkers crossing the Hudson River make up about 25 percent of the Garden State’s market.

Meanwhile, Pennsylvania also set a new sports betting record for its state, with $548.6 million wagered in December.

Despite the differences in sports betting traffic, Pennsylvania s dumpster fire system still generated more tax revenue for its state than New Jersey. In December, Pennsylvania generated $11.6 million in tax revenue, compared to New Jersey’s $8.3 million. For the 2020 calendar year, Pennsylvania made $64.5 million, compared to $50 million next door.

As New York eyed a multi-billion dollar deficit and likely little help from Washington, . However, he did so saying he wanted to make $500 million annually from the game by issuing one or more licenses to companies that would give the lion’s share of the proceeds to the state.

This is not a money-maker for private interests to collect just more tax revenue,” the governor said during his budget address last week. “We want the actual revenue from sports betting.”

The governor’s budget proposal forecasts the state generating $357 million in sports betting in fiscal year 2023. The $500 million figure is what state officials expect from a mature sports betting market.

Last month, when Cuomo first touted his plan for sports betting, he was looking at a different political reality than what we have now.

For months, Cuomo during his daily COVID briefings has touted one number, $15 billion. That was the projected shortfall New York officials forecast for the upcoming budget.

Cuomo has been insistent that Washington’s failures to keep European travelers out of the country in early 2020 set the stage for the health disaster the state faced in the first weeks of the emergency last year. He’s also mentioned numerous times that New York’s federal tax dollars are often used to subsidize other states. So, in his mind, the state is due for some payback.

Last month, Congress passed a COVID stimulus bill that included zero relief for state and local governments. At that time, it seemed apparent Republicans would retain control of the Senate for the 2021-22 Congress, making Cuomo’s hopes of getting that federal aid a long shot.

It was at that time when Cuomo started speaking about sports betting publicly.

But then another longshot came through. Georgia elected two Democrats to the US Senate, giving them control of both chambers of Congress and the White House. It led to Cuomo making last-minute changes to his State of the State speech.

If Washington gives Cuomo the $15 billion, he may entertain moving away from, as he referenced it, operating sports betting like the lottery. He’ll still want the revenue, but will be in less need of it.

There’s also a group of lawmakers in Albany that have been pressing for more progressive taxes, including higher taxes on top wage earners. Cuomo has preferred to not do that out of fear it may drive more taxpayers out of state. That sets up a possibility for lawmakers and administration officials to reach an agreement on how to assess new revenue sources, such as mobile sports betting and legalized recreational marijuana.

But that, ultimately, may depend on just how big a check Congress cuts New York.

Earlier this month, Spectrum Gaming Group shared its market study of the state with the New York State Gaming Commission. It forecasts annual gross gaming revenues for expanded sports betting at $816 million to $1.1 billion.

For its report, Spectrum only laid out tax revenue based on a 10 percent projection, probably because Cuomo’s proposal came too late for analysis. That meant tax estimates at up to $104 million annually.

However, if the revenue analysis is feasible, and there are others who believe the same, then New York could set a high tax rate on revenues, generate a return acceptable to Cuomo, and still create a system that allows for multiple operators to set up shop.

It may not be popular, but Pennsylvania has shown that a high tax rate hasn’t been as big a deterrent as some expected it to before sports betting. It may also end up being the key to make mobile a reality in New York.