Against The Odds

 

The New Year gavels in another session of New York’s legislature, and one thing is clear: the search for money to plug the state’s gaping deficit is first, second, and third on the agenda. Once again a Cuomo is looking to gambling to raise significant amounts of money, and once again it looks like a Cuomo will botch the whole affair.

Gambling (in the form of table games and slot machines) had long been forbidden by the State’s constitution, with then-Governor Mario Cuomo managing to push the envelope a bit by working with upstate Indian tribes to build casinos on reservation land. Never heard much about them? Not really surprising—the gaming offered tepid rewards, the locations were hard to get to, and there were no arenas for concerts.

Son Andrew managed to get through changes in the state’s constitution (an impressive feat) to legalize, in limited quantities, real casino gaming. The result? The highest grossing tables in the country lie not off the glitz of the Vegas strip but off the ass end of Aqueduct Raceway, home to an otherwise despondent horse track and even more despondent bettors. Before Covid, the only thing limiting growth there was the physical footprint of casino’s walls.

But then the sports book took everything over.

In what might be the only contribution from former New Jersey Governor Chris Christie, his administration sued, and won, for the right to operate sports books outside of Nevada. Long the sole domain of Vegas, the most successful sports book in the country is now at the ass end of Meadowlands race track, home to the most despondent form of horse racing, the trotters, and across from Met Life stadium, home of the even more despondent Jets and Giants. But in all of this there is one great lesson: the tri-state area has money to bet and has shown an unbridled willingness to put its money on the table. Could there be one more, great leap?

Absolutely—your phone.

Online sports betting is now the last great gambling frontier in New York, and the Governor is enthusiastic about it. Almost. His position about the current proposal is, “That makes a lot of money for casinos, but it makes minimal money for the state. I’m not here to make casinos a lot of money, I’m here to raise funds for the state. So, we have a different model for sports betting.” This was the same model that drove the local Off Track Betting (where even I would go to put down the occasion wager on a Belmont Stakes race) out of business because the state taxed it so much that it was the only bookie that couldn’t make a profit. Even in blue New York City there was no political appetite to subsidize this government fiasco.

Some might see this as a great metaphor for Democrats vs. Republicans, that corporate profits are such a bad thing that they have to be taxed into the ground until the very business ceases to exist. Others might see the socialized medicine analogy that only government knows what is right for its people. What everyone sees, and the numbers bear it out, is some $500 million a year in tax revenue for New York State. How Cuomo thinks he is going to rake in this kind of money without the private sector working hard to make the very money he is going to tax is unclear. There’s no over/under on whether it would work given that it flies in the face of any viable business model.

Nobody should be under the illusion that New York’s economic salvation will come from DraftKings ringing on their phones. And let me be very clear that I recognize gambling, particularly the sports book, and especially a phone app, can destroy a person’s life with a few swipes. But there is a way for casinos to make money, the state to gain robust revenue, and, not incidentally, decimate the illegal bookmaking market. I’m just not betting the Governor will know how to do it.

© 2021 Alexander W. Stephens, All Rights Reserved.