New York’s Big Sports Betting Rollout Not Enough For Pioneering Lawmaker

Assemblyman Pretlow laments a lack of diversity among approved operators
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New York state Assemblyman Gary Pretlow sponsored a gambling bill that became law nearly a decade ago that included the proviso that the state would be authorized to offer full-fledged sports betting as soon as federal law no longer prohibited it.

Within its first few weeks of offering mobile sports betting, New York had taken the national lead in betting handle, crossing $2 billion in just six weeks. But Pretlow is far from content, as he indicated during a 40-minute “Twitter Spaces” social media event on Tuesday.

“We should have been the first ones out of the box,” Pretlow said of the period following the U.S. Supreme Court’s May 2018 ruling that invalidated the Professional and Amateur Sports Protection Act (PASPA) that had become law 26 years earlier. That law had limited Las Vegas-style sports betting to Nevada.

Instead, New York didn’t even begin offering sports betting at its four upstate commercial casinos until September 2019 — more than a year behind New Jersey, Delaware, and several other states. The introduction of mobile sports betting lagged for a couple years more, finally launching in the state to great fanfare on Jan. 8.

“I am not happy with how some of this has been shaking out, and I’m looking to make changes,” Pretlow said on Tuesday.

High cost of entry left few options

Pretlow explained, “I have been pushing for minority participation from the beginning.” His initial proposal called for up to two dozen betting apps being available to consumers in the state. But under former Gov. Andrew Cuomo’s plan, the New York State Gaming Commission would only approve those operators that could afford a $50 million initial licensing fee and a tax payment of 51% of gross gaming revenue.

“The way that the rollout was defined by the governor kind of eliminated anyone except the biggest players,” Pretlow said. “I was looking to have 20 or 25 different ‘skins,’ at a much lower tax rate.”

Only one bidder emerged with a significant minority interest: the Fanatics sports e-commerce platform with music legend Jay-Z as a co-partner.

But Fanatics and partner Barstool Sports were not among the nine sports betting entities to gain state approval in November.

Pretlow said that he is introducing “various pieces of legislation” aimed at approval of more than the nine initial sports betting operators in the hopes of diversifying the ownership of operators. Seven have launched in the state so far, all with names familiar to any sports gambler: DraftKings, FanDuel, BetMGM, Caesars, BetRivers, PointsBet, and WynnBET.

Tax burden lessening in New York?

Pretlow introduced legislation in January aimed at locking in the state’s aggressive tax rate so that operators could not work a way around it. “If you want to lower your tax, then let in more competition,” Pretlow said at the time.

Four additional operators would need to be approved for licensure for the rate to be revised downward to under 40%, per gaming commisson rules.

All that said, Pretlow is not unsympathetic to the concerns of the already approved operators. That’s why he is planning to introduce a bill to exempt promotional bets — such as an offer of free wagers as an enticement for a gambler to sign up — from being listed as taxable gross gaming revenue.

According to taxfoundation.org, such offers can account for “over half” of gross gaming revenue in aggressive-promotion marketing environments like New York. Arizona, Colorado, Connecticut, Michigan, Pennsylvania, and Virginia are among the states that allow operators to exclude these sort of expenses from adjusted gaming revenue.

Pretlow pointed to the recent decision by Caesars Entertainment to cut way back on what Pretlow called “the cute ads” featuring JB Smoove of Curb Your Enthusiasm as Caesar and Oscar-winning actress Halle Berry as Cleopatra. Caesars had been offering matching funds of up to $3,000 for new sports betting enlisters, which Pretlow said was “hard to do” under existing New York State tax rules. Within weeks, Caesars reduced its New York match offer to $1,500.

Photo: Shutterstock

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