Spectrum Gaming Group’s long-awaited study on gaming expansion in New York suggests widespread mobile sports betting could see the state generate annual revenue of between $816m and $1.41bn.
The report was commissioned by the New York State Gaming Commission in 2019, and originally expected to be delivered in December that year. The delivery date was pushed back to June last year before being delayed indefinitely as a result of the novel coronavirus (Covid-19) pandemic.
It models potential returns for the state based on a range of different gaming expansion scenarios.
For sports betting, Spectrum examined a number of scenarios, providing modelling for the size market within three to five years post-implementation.
This revealed that should New York maintain its status quo, only permitting in-person betting at its commercial and tribal casinos, it can expect revenue of between $66m and $93m in annual revenue. This in turn would generate returns through taxation of between $4m and $5m.
A limited expansion, in which in-person wagering remains the only legal option, but off-track betting and video lottery terminals are allowed offer betting would have a notable impact. Revenue for the market at maturity would rise to between $212m and $296m, with tax take increasing to between $19m and $27m.
The potential returns grow significantly once digital betting is factored in, rising to between $816m and $1.14bn. Spectrum estimated that this would be the same whether statewide mobile wagering was allowed for only the commercial casinos, or for tribal operators.
However, should tribal operators be restricted to offering mobile on their lands, this would slightly raise the tax take, according to Spectrum’s projections. Under this model the state could expect tax in the range of $74m to $104m, it said.
Should tribes be allowed to compete statewide the tax take would come in slightly lower, between $72m and $99m. Both of these digital scenarios also factor an expansion of the retail betting market.
However, the report does not model the framework for mobile betting supported by New York Governor Andrew Cuomo. Cuomo is promoting a model in which one or more providers would be selected through a request for proposal, similar to the New Hampshire approach, which has seen DraftKings become the state’s exclusive sportsbook provider.
Spectrum also considered the legalization of online poker, casino and lottery games in New York. This, it said, could generate up to $1.1bn in revenue at maturity.
Poker would be the lowest contributor, at $60m, followed by $299m from online lottery. Online casino would provide the vast majority of that $1.1bn figure, at $750m.
However, legalizing igaming for commercial casinos would in turn allow tribal operators to enter the market – this would mean that around $730m of the $1.1bn is taxable. This suggests the returns to the state through taxation would come to $73m.
Spectrum’s report also examined potential returns from land-based gaming expansion in the state, based on a range of scenarios. These suggested that new casinos, or VLT facilities being transformed into casinos, would have a negative impact on the vertical’s revenue.
Under any expansion scenario, Resorts World Catskills – which is relatively remote compared to other venues – would be negatively impacted.
In particular, a major land-based expansion in which three downstate casinos were opened alongside two new VLT facilities would do more harm than good. Rather than increasing tax take, this would most likely result in upstate facilities closing or reducing their staff numbers as they suffer from increased competition.