Comprehensive Sports Betting Hearing Wraps Up In New York
ALBANY, N.Y. — Gambling stakeholders gathered in the New York capitol Wednesday morning for a public hearing on legal sports betting.
Sen. Joseph Addabbo presided over the discussion, acting as the chair of the Racing, Gaming, and Wagering Committee and the captain of an effort to legalize online betting. He was joined in the spotlight by his equal and co-sponsor in the lower chamber, Assemblyman Gary Pretlow.
As currently written, their bill (S 17) would allow tribal and commercial casinos to offer sports betting statewide at a cost of $12 million apiece. The tax rate, the allocation of online licenses (or skins), and the merits of a proposed integrity fee were among the other details up for debate.
Wednesday’s testimony could go a long way toward shaping the future of online sports betting in New York. The lead actors began their big day with a 10 a.m. press conference on the fourth floor of the statehouse.
Legal Sports Report was on location in Albany with a front-row seat for the proceedings.
NY sports betting panels
The 11 a.m. hearing is divided into a series of panels targeting individual components of NY sports betting. Here’s the lineup for what figures to be a long day of testimony:
Sports leagues
- Dan Spillane, NBA
- Andy Levinson, PGA Tour
Spillane opens the panel discussing a few key points from his recurring written testimony. Over the better part of the last year, the figurehead of league lobbying has delivered similar words to lawmakers all across the country.
“But New York is special,” he speaks to his audience.
Headquartered in Manhattan, the NBA is among the professional sports leagues that calls the Empire State home. Spillane summarizes his league’s fundamental request to lawmakers: “Legislation should protect the fans who bet on sports, and it should safeguard the integrity of the underlying competition.”
This would include restrictions on certain bettors and bet types along with, of course, the integrity fee and the mandated use of official league data.
Levinson runs through some of the professional golf tournaments New York hosts, including next week’s PGA Championship. He largely restates Spillane’s talking points while sidestepping the fact that sports betting has been legal for a long time.
“We have nothing if we don’t believe athletes are trying their best, or if they believe the outcomes are contrived in any way,” he says. “Sports betting puts that at risk.”
Levinson equates official league data with standardized, regulated gaming equipment (like a roulette ball). He focuses most of his energy on in-play betting, which seems to echo a broader trend among sports governing bodies.
Addabbo asks if either league has seen evidence of increased integrity risks amid expanded US sports betting. Spillane responds with an inapplicable discussion of illegal, offshore sportsbook operators.
The PGA Tour supports the bill as written.
Players’ associations
- Joseph Briggs, NFL
Briggs thanks the committee for the opportunity to testify but warns that players’ associations have concerns over the amended language.
His wish list centers around the athletes he represents, of course. Briggs testifies to an “increase in anxiety” in the interactions between fans and athletes, which have sometimes gone beyond heckling.
“The leagues have to do something to address that within the stadium,” he says, “but what happens when they walk out?”
In order to garner support from organizations like the NFLPA, the NY sports betting law needs stronger physical safeguards for athletes, referees, and other league personnel. Briggs also spoke in support of the royalty fee included in Addabbo’s bill but suggested allocating it to things like post-retirement healthcare for athletes.
Commercial casinos
- Chris Grove, Eilers & Krejcik Gaming
- Tim Wilmott, Penn National Gaming
A leading analyst on emerging gambling markets, Grove comes armed with hard projections for the state’s financial potential.
According to his testimony, a mature NY sports betting market — including statewide mobile betting — would produce just over $1 billion in total annual gaming revenue. If, however, lawmakers continue to restrict NY sports betting to the retail setting, that number shrivels by a factor of 20 to a projected $48.3 million.
Grove leaves the committee with three three connecting thoughts:
- Regulated sports betting is a significant opportunity for NY
- The majority of that opportunity is realized via mobile channels
- The NY market can/should surpass New Jersey with ease
Wilmott describes the behavior of a typical NY casino customer, including how much time they spend traveling to visit a brick-and-mortar property.
Responding to a question about addiction, Grove cautions that lawmakers would do well to address problem gambling with a direct, statutory allocation of funds.
Industry operators
- Danielle Boyd, William Hill
- James Sottile, Scientific Games
- Kip Levin, FanDuel
- Jeremy Kleiman, iDEA Growth
Boyd opens the operators’ panel by discussing the breadth of the William Hill empire — both in the US and abroad. On behalf of the Nevada sports betting leader, she asks the committee to:
- Increase the number of skins permitted for each licensee
- Remove the royalty fee and official data mandate
As Boyd testifies, no sports betting law in any US state includes such provisions which narrowly benefit leagues.
Levin follows with similar testimony on behalf of FanDuel, which has blossomed into a multi-vertical gambling powerhouse over the last year.
Given its location along the NY-NJ border, FanDuel Sportsbook sees significant action from non-residents. According to Levin, the company can attribute as much as 25% of its online NJ sports betting activity to New Yorkers slipping across the border to get a bet down.
Sottile echoes many of the same thoughts, though he is not arguing on behalf of any single operator. Instead, his company is deeply interested in rebutting the leagues’ attempts to weaponize statistical data.
“They don’t (own it),” he says. “They simply have ready access to it and the ability to license it.” He argues that such a gift-wrapped monopoly does not have a precedent in any industry.
Kleiman focuses on convincing the committee that mobile betting is fundamental to the goal of maximizing state revenue from sports gambling — and operators’ efforts to rechannel existing bettors into the regulated environment. He recommends allowing remote registration, as well.
Chairman Addabbo and other members of the committee ask many questions of this group, seeking context on the mechanics of operating a sports betting platform.
Integrity/location/data
- Jake Williams, Sportradar
- Chris Dougan, Genius Sports
- Lindsay Slader, GeoComply
- James Kilsby, GamblingCompliance
Kilsby goes first, running through the legal and regulatory climate for sports betting across the US. The gist of his testimony is that each market is unique, and policymakers in New York should tailor their framework to the needs of their own state.
Williams and Dougan are the two witnesses most likely to argue for an official data mandate. Between them, Sportradar and Genius Sports hold the rights to distribute statistics for many sports leagues, including the “big four” in the US and the NCAA. Dougan is a no-show, however, and Williams highlights the need to construct an industry-friendly model.
“The best way to allow operators to compete,” he says, “is to craft a regulatory framework that allows operators to participate in this market without being overburdened.” Integrity fees and official data, of course, represent two of the largest proposed burdens to date.
Slader then steals the show, displaying a real-time map of geolocation checks for NJ online gambling sites. Someone in the room tests the virtual fences while she speaks, and a reassuring red pin immediately drops in Albany. The chairman is duly impressed with the failed attempt.
Addabbo spends a good while questioning this group, too, looking to clarify the order of operations in the case of a suspected integrity breach. Williams testifies that Sportradar monitors betting trends from a “macro perspective” but does not have access to individualized betting data.
Native American tribes
- Daniel Wallach, Wallach Legal
- Jeff Ifrah, Ifrah Law
- Sarah Walters, Brownstein Hyatt Farber Schreck
Walters has a great deal of experience working with and around tribes, and her insight is relevant to the landscape in New York.
She commends Addabbo for being mindful of tribal sovereignty and existing compacts in constructing his bill. The proposed language would allow both commercial and tribal casinos to seek licensure, essentially eliminating the borders of their territories for the purposes of sports betting.
It is, as Walters says, “a respectful solution to this dilemma” of tribal exclusivity versus their desire to compete statewide.
Ifrah and Wallach mostly testify to the constitutionality of online betting under the existing NY sports betting law. The latter lays out a few supporting arguments:
- Words like “online” and “mobile” do not appear in statutory prohibitions
- NY constitution delegates specifics of gambling implementation to the legislature
- Lawmakers have expanded the approved forms of horse betting on multiple occasions
Wallach also discusses recent legal precedent in New York and general principles of contract law that may be applicable.
Legacy interests
- David O’Rourke, NY Racing Association
- Joseph Applebaum, NY Thoroughbred Horsemen Association
- Jeffrey Cannizzo, NY Thoroughbred Breeders
- Joseph Faraldo, Standardbred Owners Association
- Henry Wojtaszek, Western OTB
- Anthony Pancella, Suffolk OTB
Earlier in the day, Sen. Daphne Jordan urged her colleagues to consider the horse tracks and OTBs within this sports betting proposal. As written, the Addabbo bill would limit licensure to casinos only — both tribal and commercial.
Tracks are some of the oldest gambling venues in New York, though, and stakeholders showed up in Albany to argue for inclusion. The horsemen also seek in-person registration, which Pancella suspects would allow them to compete with larger casino operators.
Unfortunately, the racing industry is comparatively uninformed (or perhaps intentionally disingenuous) on the topic of sports betting.
Applebaum makes some of the same points as Pancella, but his bias shines through as he continues. He contends that licensed operators in NJ are no different than unlicensed, unregulated offshore bookmakers elsewhere in the world. Without offering an alternative, he argues that New York lawmakers should consider something “more modern” than the existing standard.
The pitch from O’Rourke includes a few ways in which the racing industry boosts employment and tourism. Faraldo asks that a portion of all NY sports betting revenue be shared with track operators.
Gambling addiction
- James Maney, NY Council on Problem Gambling
- Stephen Shafer, Coalition Against Gambling in NY
Problem gambling testimony is imperative to good legislation, but so often spoiled by broader anti-gambling sentiments. That is the case here, too, as Shafer opens by asking the committee not to legalize NY sports betting — which is already legal — at all.
“State officials need to stop turning millions of people who could be small savers into habitual bettors,” he says.
Shafer refers to gambling as a form of regulated fraud, relying on catch phrases like “major social cost” and “money laundering” and “tax evasion” to argue his points.
Maney does a better job discussing the very real issue of problem gambling. His work centers around keeping existing gamblers from becoming pathologically addicted to the activity, and he closed with a plea for increased awareness amid expansion.
“We do not take a stance for or against gambling,” he said. “We advocate for people.”
Where does NY sports betting stand?
New York is one of the few states with a sports betting law that predates the US Supreme Court decision in May 2018.
Resident voters approved commercial casinos via a 2013 referendum, and the resulting law authorized sports gambling once the federal ban fell. With regulators now working to finalize rules, the state’s first legal sportsbooks should be open before fall.
As written, though, those rules contain no provisions for online/mobile betting. Such an addition would require a new law at the very least, and possibly another referendum at the ballot box.
Gov. Andrew Cuomo expects the latter, but the sponsors believe their bill paves a viable legislative path. Armed with legal opinions from local firms, they contend that online betting does not represent an unconstitutional expansion of approved sports gambling.
Even if this bill finds favor from Cuomo, however, opposition in the Assembly remains a tall hurdle on the horizon. New York lawmakers are in session until late June, giving them six weeks to work out the kinks before adjournment.
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