New York Governor Flip-Flops, Will Support Mobile Sports GamblingGeneral News
New York Governor Andrew Cuomo said this week that he plans on making online sports betting a central theme of his policy proposals that he'll lay out during his annual State of the State address.
But, it's not just New York residents, lawmakers and businesses who are excited by the news. Stock traders are pumped, too.
Two prominent Wall Street sports betting stocks received significant backing from investors following Cuomo's Wednesday announcement. It's a move that shows confidence in the potential of online sports betting in New York -- months before it's even been legalized.
Cuomo Flip-Flops on Mobile Sports Wagering
While New York has legalized sports betting on the books, it doesn't allow any wagering online. TO this point, Cuomo has strongly opposed online sports betting, saying he believes it would be against the state constitution.
As recently as last spring, Cuomo opposed mobile sports betting in New York.
"Sports betting, first of all, does not make you that much money. They raised something like $13 million -- $30 million is a rounding error in our state [budget]," Cuomo said in the spring. "I am not a fan … [of when] you can bet anytime from your cellphone."
Now, Cuomo has completely changed gears.
Why the Change of Heart?
New York is experiencing a huge $16 billion deficit in its state budget due to the COVID-19 pandemic. Raising taxes is one way to bridge that gap, but that may not even cover it completely. It's also a move that Cuomo is reluctant to make as businesses and residents are struggling to survive.
And so, he has decided instead to give mobile sports betting a try. In a statement, Cuomo highlighted the financial boon mobile sports betting could be to New York:
"New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home, which will only strengthen our ability to rebuilt from the COVID-19 crisis."
What Cuomo is referring to is the fact that neighboring New Jersey is tearing up the sports betting record books month after month. The Garden State had a sports betting handle of $931.6 million in November, far outpacing Nevada. It's the largest monthly handle ever recorded.
That month, sports books in New Jersey recorded $50.6 million in revenue, and the state garnered $6.2 million in taxes from it.
In addition, recent surveys have indicated that nearly one-fifth of the total sports gambling revenue for New Jersey actually comes from people who live in New York.
Cuomo commented specifically on this fact when he said:
"At a time when New York faces a historic budget deficit due to the COVID-19 pandemic, the current online sports wagering structure incentivizes a large segment of New York residents to travel out of state to make online sports wagers or continue to patronize black markets."
The online sports wagering legislation Cuomo is allegedly going to propose would put the New York State Gaming Commission in charge of issuing licenses for online wagering. That agency will also be responsible for ensuring the legitimacy, safety and security of any mobile apps used for sports wagering.
The proposed legislation is likely to mirror some that was unveiled last year. Under that proposal, the servers for the gambling sites would be based at the locations of the upstate casinos that currently offer in-person sports wagering at physical sports books.
Stocks Rise with the News
Two prominent Wall Street sports wagering companies saw their stock prices rise substantially following Cuomo's announcement.
On Wednesday, the Roundhill Sports Betting & iGaming ETF (BETZ) reached its all-time high price of $27.8054. That was a 4.4% increase.
DraftKings Inc., meanwhile, increased by as much as 8.9% on trading. DraftKings is part of the BETZ ETF.
If New York follows through with Cuomo's plan, and mobile sports wagering is offered soon, it's likely to be a huge boon to all of New York and those invested in these sports wagering companies.
The interest aspect will be how it may affect New Jersey's gambling revenue handle.