New York's Mobile Sports Betting Aspirations Remain Complicated

The state of New York certainly isn't making it easy on itself to launch a long-awaited and potentially enormously popular mobile sports betting platform. Let's just say … it remains complicated. Retail sports betting has been around in the state since 2013, but mobile betting has somehow yet to get the green light in the Empire State.

New York's pursuit of a more modern and lucrative mobile sports betting platform to add to its underwhelming retail industry is not new. And neither are the regulatory hurdles and roadblocks in its way. The push to increase accessibility and profitability for New York's legal sports betting scene has been long and arduous with no real tangible solution in sight. Taxation seems to be the latest in a long line of issues plaguing a full-out launch.

Not having to look too far

New York has had the advantage of sharing a border with the most successful and lucrative legal sports betting jurisdiction in the country: New Jersey. In September, the Garden State recorded the country's first one-month $1-billion sports betting haul, 90 percent of which came from its mobile sports betting apps.

It has been estimated that 20-to-25 percent of New Jersey's consistently impressive sports betting handles come from New York bettors crossing state lines and using New Jersey sportsbook apps.

Currently, New York bettors who wish to keep their money in the Empire State are confined to four upstate casinos hours from the urban centers and population base. Mobile betting would alleviate that issue immediately and keep gambling dollars in New York instead of flowing to neighboring jurisdictions.

Tax matrix?

Legal sports betting regulators in New York have come up with what they call a "pricing matrix" for prospective providers. Instead of a common, simple, across-the-board tax policy, the Empire State has opted for a far more complicated procedure for taxing mobile sports betting providers.

There are a host of possibilities for the tax rate that range from 35-to-64 percent for mobile providers. All are extreme but, surprisingly, all will leave room for prospective providers to generate a fair amount of revenue. Margins will be tight, but there is still money to be made.

So, while a firm tax rate has not been identified in New York, we are left to assume that a ballpark, complex 50-percent tax rate is on the horizon for providers.

For comparison's sake, Pennsylvania currently boasts the highest mobile sports betting tax rate in the country at 36 percent. There have been no complaints about sportsbooks suffering in those markets.

Timeframe

Prospective New York legal sports betting providers have until today at 5 p.m. ET to submit applications with the "pricing matrix" considerations. All applications must satisfy “final tax-rate matrix” considerations to take the next step. Not amending applications with matrix considerations will lead to disqualification for further licensing considerations.

With applications still coming in, with licenses still having to be awarded and a few other regulatory hurdles to be cleared, 2021 doesn't seem like a realistic timeframe for New York mobile betting to go live. Super Bowl 2022 is a popular date mentioned as the jumping-off point to online sports betting in New York (that takes us into February and would mean that New York misses out on a whole NFL season again).

What's at stake

There has been no shortage of studies surrounding the potential of a New York mobile sports betting market. Heavyweights BetMGM, DraftKings, FanDuel, and Bally Bet commissioned their own study and estimate $600 million in gross gaming revenue in the first full year of mobile sports betting before increasing to $1.3 billion annually by the end of year three.

Kambi released its own numbers with about $892.5 million in state tax revenue being generated at a tax rate of 51 percent.

“New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home, which will only strengthen our ability to rebuild from the Covid-19 crisis,” former Governor Andrew Cuomo said back in April.

“Mobile sports betting we think could raise $500 million dollars. Many states have done it.” Cuomo added.

Missing the boat

New York legislators and sports betting regulators have a knack of missing the boat with regard to what is best for their state and their gambling industry. There have been numerous chances for New York to step up its legal sports betting game, but the state has failed at every turn.

We are nearly halfway through the bread-and-butter NFL season and yet there is no mobile betting in New York just yet. While the appetite seems to be there for the advancement of a legal mobile sports betting platform in the state, a quick and easy path isn't.

“All the states around us allow mobile sports betting. New Yorkers travel across the George Washington Bridge and place their bets in New Jersey, betting on our sports teams,” new Governor Kathy Hochul said. “The time has come, we need the revenue of $500 million a year.”

Takeaways

Cuomo was the architect of the mobile sports betting confusion in the state. The state’s new governor hasn't done much to minimize any of the hoops providers are being forced to jump through.

At this point, with more delays and an incredibly high proposed tax rate for providers, bettors in the state are the ones who are suffering and will continue to do so as providers attempt to make up for the tax dollars they will be forced to cough up.

Providers will still scramble to be a part of the New York scene for sure, but questions remain about the promotions that will be afforded New York bettors and if the market will be consumer-friendly.

Post made on 10/25/2021 9:47 a.m. ET