New York Sports Betting Bill Update

New York Senate Bill 7900 (S. 7900) made quite the splash after its March 7 introduction in the Racing, Gaming and Wagering Committee, but time will tell if it can make it all the way to “law” status.

Along with time, which definitely seems to be on the side of legal and regulated New York sport betting expansion, the New York Assembly and the U.S. Supreme Court will also have their say on the matter as well. That’s because the members of the former so far hasn’t put together a companion piece bill that addresses the same questions of the legality of online sports betting in the Empire State, though key committee members say they are working on it. The justices of the latter entity are still due to consider whether or not the Professional and Amateur Sports Protection Act of 2006 (PASPA) is unconstitutional for violations of tenants of the Equal Sovereignty doctrine as the state of New Jersey alleges.

In either case, it will take some heavy lifting for the law of the land to change in New York, but it remains a distinct and increasingly likely possibility that betting on sports could go from being allowed at the state’s four non-tribal commercial casinos to being widely permissible online as well. As it stands, the laws passed by the legislature back in 2013 make it possible for the del Lago Resort & Casino, Tioga Downs Casino, Rivers Casino & Resort Schenectady and Resorts World Catskills to offer sports betting at their locations, but the newly proposed S. 7900 takes things a step further. That’s because the new prospective bill also includes provisions to allow those four casinos to enter into partnerships with race tracks and internet lottery providers to offer off-track betting kiosks with a sports gambling option at locations around the state

Additionally, S. 7900 makes a few concessions to the professional sports leagues, which, understandably, are a highly prized source of support for any would-be laws looking to allow further expansion of sports betting. Pretty much, if you don’t have the leagues on board then you won’t be getting anything of note accomplished in this arena – or at least that has been the assumption for what seems like ages. However, the New York State Assembly has taken issue with a few of these concessions, designed to get the leagues (all of which have softened their stances on sports betting in the last few years for the obvious reason that the cat is out of the bag thanks to the internet), points to potential problems ahead.

The real headliner among S. 7900’s problem provisions as far as the Assembly’s Gaming Commission Chairman Gary Pretlow (D-Westchester) is the inclusion of language in the proposed legislation that would have the state’s newly minted sportsbooks pay an “integrity fee” directly to the leagues themselves. The purpose of integrity fees, which in this case would come be a 1 percent fee assessed on the handle – that being all the action taken by a sportsbook for a given period, is twofold. On one hand the fees are a way of compensating the professional leagues for the “use” of their product for the purpose of sports betting, but in another way the fees can be used to monitor sports betting practices and ensure a safe, above-board experience for players.

Pretlow has gone on the record as saying that, though he opposes integrity funds as they are proposed to be implemented, he is in favor of the New York passing some kind of law to bring sports betting under state regulation. In this regard, Pretlow, who chairs the New York Assembly’s Gambling Committee is like his state Senatorial counterpart John Bonacic (R-Orange County), who chairs the Senate Racing, Gaming and Wagering Committee and is the primary bill sponsor and author of S. 7900. Bonacic for his part obviously prefers to have the commissioners of the MLB, NBA, NFL and NHL on his side in a push to get legal New York sports betting expanded into the online realm, but both mean agree that the state needs to have a role in regulating the practice.

The reason for the push to get sports betting legalized is so that the state can cash in on the $30 million in additional state revenues expected to be brought in if users of so-called “black market” offshore sportsbooks can be brought into the fold at domestic sports betting operators. These overseas-based online sports betting shops collect the lion’s share of the multi-billion-dollar annual sports betting handle, and, naturally, they don’t have to pay taxes on those earnings. However, a move to assess an integrity fee on prospective domestic operators in this segment could have several deleterious impacts, and not just on the bottom line of the sportsbooks.

While it is true that the ‘books would have to give up a projected amount worth 20 percent of their actual earnings, the real negative of that would likely be felt by their customers, who would naturally have to pay more to offset some of the cost associated with paying out to the professional leagues. This could, in turn drive even more players to the offshore sports betting offerings, as these sites are simultaneously legal, being regulated in their home countries overseas, and outside the reach of any prohibitions against sports betting imposed by federal or state law. It would be a lot, the reasoning goes, to expect sports fans to shell out more money to enjoy the privilege of a domestic sports betting platform when they already have access to an equally good product, especially with enforceability of existing laws is pretty much nil.

Nevertheless, the hope in Albany is that a compromise on the issues can be reached before the June 20 sine die brings the 2018 New York Legislative Session to a close. There are plenty of indications that the Supreme Court could indeed rule in favor of New Jersey, repeal PASPA and effectively end the Las Vegas stranglehold on the US sports betting market. But whether or not New York, and to an equally large extent many Northeastern States with well developed casino gambling infrastructures and an eye toward the future will take the ball they’ve been given an run with it remains to be seen. We will keep our ears to the ground on this important issue in the next few weeks, and you should too if you’re interested in the possibilities afforded by more broadly legal New York sports betting.

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