State commission takes key step toward authorizing online sports betting in New York

ALBANY — The state Gaming Commission on Monday took a key step that is expected to pave the way for online gambling on New Yorkers’ smartphones in time for the Super Bowl.

The commission approved licenses for FanDuel; DraftKings; Bally’s Interactive; Rush Street Interactive; Caesars Sports Book; BetMGM; Wynn Interactive; Resorts World; and PointsBet to operate online sports betting in the lucrative New York market.

If winning bidders can get their operations running soon enough, New Yorkers will join residents of states including New Jersey in being able to gamble online on Super Bowl LVI on Feb. 13 in Los Angeles, the commission said.

The gambling companies have expressed confidence they can get their computer operations up and running for the game.

"New York has the potential to be one of the largest sports-betting markets in the U.S.," Adam Greenblatt, CEO of BetMGM, said in a statement to the business news site MarketWatch.

The winning bidders now must enter into partnerships with "brick and mortar" entities such as casinos, according to the Gaming Commission.

The casinos will host the computer servers that will be used take online bets on sports.

In partnering with established casinos to house their computer servers, the online gaming companies will avoid violation of provisions of the state constitution that could make gambling purely through the internet unconstitutional.

Online sports gambling operators will have to pay a licensing fee of $25 million to New York State, and pay their partner casinos $5 million.

The state would tax operators' gross revenues at a rate of 51%, higher than in most other states, supporters of online gambling said.

The state Division of the Budget has estimated mobile betting could bring in $500 million in annual revenues once the system is fully operational.

State Comptroller Thomas DiNapoli cautioned that actual revenues may "differ significantly."

DiNapoli noted that "the last major expansion of state gambling through the licensing of casinos failed to generate the level of revenues initially projected in licensing applications."

The partnering agreements also will boost revenues at four state gambling facilities in the Southern Tier, the Albany area, the Finger Lakes and the Catskills, state officials said.

In April, then-Gov. Andrew M. Cuomo and the Legislature approved mobile sports betting in the 2021-22 state budget as a revenue raiser after state tax revenues had been decimated by the COVID-19 pandemic.

Cuomo argued that online sports gambling was being embraced by neighboring states where New Yorkers were traveling to place bets, so New York State should get into the game.

To attract support in the New York State Legislature, the legislation authorizing sports gambling required 1% of receipts in 2021-22, and $6 million a year afterward, to go into a Commercial Gaming Fund for problem gambling education and treatment.

State Sen. Joseph Addabbo, chairman of the Senate Racing, Gaming and Wagering Committee, said in April that sports betting "will bring in the funds needed by the state that will go towards funding our education system, problem gambling awareness programs and creating jobs."

Addabbo (D-Queens) argued, "When New York residents travel to other states or participate in the illegal market to place mobile sports wagers, there is no way for us to identify and help them should they have a gaming addiction."

"By safely legalizing mobile sports betting, New York State can better recognize and assist those with a gambling problem, with the help of the over one dozen safeguards and measures written into the bill’s language," Addabo said.

Also, $5 million a year will go to statewide youth sports and education grants administered by the state Office of Children and Family Services, DiNapoli said.

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.