NY Sen. Joe Addabbo criticizes Gov.'s plan for online sports betting, wants more operators

New York State Sen. Joseph Addabbo Jr. has criticized Gov. Andrew Cuomo’s plan to legalize mobile sports betting through a competitive bidding process, highlighting the obstacles ahead for legalizing online gambling in the state.

The chairman of his chamber’s Racing, Gaming and Wagering Committee, Addabbo told the Wall Street Journal that he welcomed the governor's shift away from his opposition to online betting but believed the state should enact a more expansive system. "I am not a believer that one sportsbook provider, or operator, can handle the volume in New York,” Addabbo said. “I don’t think it’s good for the consumer—I think you’re pushing the consumer to New Jersey or to an illegal site.”

In New York, sports betting is currently allowed only in physical venues at its four existing commercial casinos and other facilities operated by Indian tribes. The governor has recently proposed allowing online gambling as a way to raise revenue for education aid as the state faces an $8.7 billion deficit. State Budget Director Robert Mujica said the governor has re-evaluated his position after additional legal research. Cuomo said he would include language this week as part of his state budget proposal directing the New York State Gaming Commission to solicit bids for a small number of mobile sports wagering operators.

Mujica said this competitive approach would mean New York could tax a higher percentage of gross gambling revenue. Legislation sponsored by Addabbo, and backed by the industry, would allow for at least eight operators, or skins, and sets a 12% tax rate for online wagers. Mujica said it was possible the state would pick multiple companies to operate sports betting.

Executives at the largest online sports-betting operators issued statements saying they would work with the state, but some in the industry were skeptical of New York’s approach. FanDuel Group CEO Matt King said in other states, “a model with competition among experienced operators is critical to maximizing state tax receipts and consumer choice.”

A single operator runs online sports betting in New Hampshire, Oregon, Rhode Island and the District of Columbia, according to Chris Grove, a partner in Eilers & Krejcik Gaming. He told the WSJ that having fewer operators reduces product diversity and marketing, which would lead to fewer legal wagers. He co-wrote an industry-backed report last year that projected the state could raise $148 million a year from 10 operators paying a 12% tax rate.

Sen. Addabbo estimated his legislation could generate $79 million a year, plus one-time revenue from licensing fees. Mujica said that the state could generate up to $500 million with higher tax rates.

The New York State Constitution has strict anti-gambling language, but was amended to allow sports betting, slot machines and table games at the limited number of casinos in the state. To comply, casinos would be the sites of the servers under both Addabbo and Cuomo’s online plans.

Tioga Downs Casino Resort owner Jeff Gural said he hoped Cuomo would ensure all casinos could gain revenue from mobile betting. “I think there is an opportunity to stabilize the four upstate casinos, give them the resources to grow and continue to hire people, and at the same time generate a lot of money for the state,” he said.