The State of New York will expand the sports betting market to include mobile devices after Governor Andrew Cuomo announced the budget. The planning, already approved by the General Assembly, focuses on a state approach, with the aim of generating more than US $ 500 million in revenue for the public coffers.
“The budget for fiscal year 2022 allows for mobile sports betting. Once fully implemented, legalization will provide more than $ 500 million in much-needed revenue for the state to rebuild after the pandemic and turn what could be the largest sports betting market in the U.S. into a profitable industry in the long term, “it says. in an official note from the governor’s office.
The state will announce a call for bids and must choose at least two platform providers that will need to work with four operators. Fully implemented, the program will provide $ 5 million a year for grassroots sports and $ 6 million to help tackle gambling problems, doubling the amount currently available. The rest of the new revenue will be passed on to the education sector.
Cuomo believes that the sector will earn US $ 500 million to the state
“Mobile sports betting will be a reality. The program will generate $ 500 million annually for youth sports education. The law allows the state to directly operate mobile sports betting. Therefore, the US $ 500 million will go to the state, instead of many intermediaries that operate mobile betting, which is how many other states have done it, ”said Cuomo.
The governor added: “It is like the state lottery where we operate and obtain the funds. The law does not authorize any new casinos. I object to any casino authorization plan that is subject to the policy. We have a Gambling Commission that decides that ”.
Also according to Andrew Cuomo, there is a lot of money involved in casinos. “There are a lot of lobbyists, there are a lot of political contributions and I want to make sure that any decision made is purely based on merit and I have nothing to do with a casino plan that can be politicized.”
Industry begins to challenge New York governor’s estimates
Even though the news was long awaited by the betting industry, there is already contention about the New York governor’s projections. The state-managed system is expected to result in more money for the public coffers, only the amount may fall below the $ 500 million forecast.
Analyst Eric Ramsey believes that operators would need to generate a gross gaming income (GGR) of around 1 billion to achieve this annual tax target, based on a 500% revenue share.
“Achieving $ 1 billion in annual GGR ($ 500 million in tax revenue) would require operators to set aside at least $ 10 billion in total bets, which would require an average New York adult to bet about $ 615 a every year. This presupposes a generous retention of 10%, which is well above the national average of 7.2% ”, projected Ramsey.
The analyst added that, using these numbers, the total movement would need to be around 14 billion to be in line with the projections. Minimizing the revenue share to 40% would be more realistic and would mean that the control device rises to almost $ 17 billion, equivalent to spending $ 1,100 on adult bets per year.
DraftKings already indicates that it must dispute one of the licenses to operate mobile betting in the state. “We want to thank Governor Cuomo for the progress made in making mobile sports betting legal and regulated in New York. We hope to learn more as the process continues to unfold, ”said Griffin Finan, vice president for government affairs and associate general counsel for the company.