By Jimmy Vielkind 

ALBANY, N.Y. -- New York lawmakers were set to legalize mobile sports betting as part of the new state budget headed for final approval on Wednesday.

The state will select at least two companies through a competitive bidding process this year to operate online wagering, according to language in the $212 billion spending plan. Members of the Democrat-controlled state Senate and Assembly approved a budget bill with the provisions on Wednesday. Gov. Andrew Cuomo said he would sign the measure.

Lawmakers considered and rejected a budget provision that would have permitted up to three additional casinos in downstate areas, including New York City. Licenses for that area are on hold until 2023. The budget did call for the state Gaming Commission to solicit interest from prospective bidders and write a report about casino expansion.

But state leaders said New York was losing out on revenue from mobile sports betting to illegal operators and nearby states, including New Jersey. They said they hope legal wagers will eventually yield $500 million of annual tax revenue.

The budget language requires the Gaming Commission to issue a request for proposals by July and award licenses later this year. The commission must select two platform providers, but they may partner with multiple operators, or skins, which provide consumer-facing products.

State Sen. Joe Addabbo, a Democrat from Queens who supports sports betting, said he hoped the Gaming Commission would move quickly to set up the program.

"There's no reason why we shouldn't be able to bet on the Super Bowl," he said, referring to the football championship scheduled for February 2022.

Providers will be selected based on how they would "maximize sustainable, long-term revenue for the state," according to the budget bill. The commission will consider a provider's proposed tax rate, marketing plan, track record and ability to start operating quickly, the bill says.

Mr. Addabbo and legislators had advanced a sports-betting plan in which the state's existing commercial and tribal casinos would be able to partner with mobile-betting companies. Mr. Cuomo successfully pushed for a model where the state would contract directly with a betting provider, which he said would let the state secure a higher tax rate on wagers.

"We operate it, we get the resources," Mr. Cuomo said Wednesday.

Mobile sports betting is already legal in 16 U.S. states, according to the National Conference of State Legislatures. New York represents a major market for companies, said Daniel Wallach, a lawyer who focuses on the regulated sports-betting and gaming industries.

"Right now, New York is probably the grand prize, given that California is probably a few years away," he said.

New York's approach to mobile wagering drew concern from some casino operators and other gaming analysts, who worried that picking a small number of operators would drive bettors to other sites that offer lower tax rates and better odds. New Jersey charges a 13% tax on gross revenue from online sports wagers.

Jeff Gural, who owns the Tioga Downs Casino Resort near Binghamton, N.Y., said New York's plan wouldn't generate the revenue that was projected.

"It's the dumbest thing I've ever seen," said Mr. Gural, who also owns the Meadowlands Racing & Entertainment complex in New Jersey, which partners with FanDuel to offer mobile sports betting. "I consider this a gift to New Jersey and to me at the Meadowlands."

Freeman Klopott, a spokesman for Mr. Cuomo's budget office, said Mr. Gural wanted a deal like he and his partners had in New Jersey, where they made more money than they paid to the state.

Because of strict limits on gambling activities in the New York State Constitution, servers handling mobile sports bets must be located at existing casinos in the state, the bill says. Providers must pay a casino $5 million a year for hosting a server, in addition to associated expenses.

The Oneida Indian Nation operates casinos in Central New York and has a compact with the state, signed in 2013, in which the tribe makes payments of roughly $70 million a year in exchange for exclusive rights to operate gambling in a 10-county area that includes Syracuse and Utica.

The Oneidas offer sports betting within their facilities and say they believe online wagering operated by another party would constitute an infringement of their compact.

"We are disappointed and believe the legislation is a step backwards," Oneida spokesman Joel Barkin said in a statement. "It is unfortunate that the State has chosen instead to take such an unbalanced approach that will unnecessarily hurt our region. We remain open to discussing workable solutions when the state is prepared to do so."

Aides to the governor said Wednesday that providers would be encouraged to strike revenue-sharing arrangements with tribes, and that such agreements would be taken into account when the Gaming Commission awarded licenses.

Representatives from mobile sports betting companies said they were pleased with the legislation. FanDuel spokesman Chris Jones said the company looked forward to the bidding process and "hope we are ultimately able to bring our FanDuel Sportsbook product to customers in our home state."

Griffin Finan, the vice president for government affairs at DraftKings Inc., said the company looked forward to learning more as the process unfolded.

Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com

 

(END) Dow Jones Newswires

April 07, 2021 20:15 ET (00:15 GMT)

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