New York Governor Andrew Cuomo has finally signaled his willingness to legalize mobile sports betting. In the wake of a massive budget deficit – currently estimated at $15 billion – Governor Cuomo and New York lawmakers have begun to seek out new revenue-generating measures. According to Mr. Cuomo, mobile sports betting could generate about $500 million annually once implemented. On its face, this seems to be a plausible and promising plan, even if the projected tax dollars from such a measure could take years to materialize.
But does the New York Legislature have the power to legalize mobile sports betting?
Article I, Section 9, of the New York Constitution broadly prohibits gambling (with certain exceptions) and authorizes the legislature to pass appropriate laws to prevent gambling offenses. In 2013, a voter referendum amended Article I, Section 9, to allow “casino gambling at no more than seven facilities as authorized and prescribed by the legislature.” That same year, the governor signed legislation to permit sports betting as a form of casino gambling, but the legislation did not authorize mobile wagering.
According to gaming attorney Daniel Wallach, “if you accept the premise that sports betting at New York’s upstate casinos is permissible under the New York Constitution, then adding a mobile component tied to servers located at those casinos should likewise pass constitutional muster.” The more pertinent issue is whether mobile sports betting (and sports betting generally) fits within the 2013 amendment for casino gambling at no more than seven facilities.
Last month, Governor Cuomo proposed that mobile sports betting be set up through a competitive bidding process. Under the proposal, “the New York State Gaming Commission would issue a request for proposals inviting bids from any interested mobile operator that had a market access deal with one of the licensed commercial casinos.” This bidding process would likely exclude from the impending sports betting goldmine gambling “affiliates” (including horse racetracks and major professional sports venues), as well as tribal gaming operators. Instead, Cuomo’s budget bill states simply that mobile sports betting would be permitted “through a platform provider or providers,” which ostensibly includes only mobile providers (DraftKings, FanDuel, etc.) that have market access deals with the upstate casinos.
In a recent Forbes article, Wallach argues that disenfranchising so many key stakeholders from the sports gambling industry might “incentivize one or more of those entities to challenge the legitimacy of the entire ‘casino-based’ sports betting regime.” One argument these stakeholders might raise, as the article points out, is that the 2013 amendment, which authorized seven non-tribal casinos in the state, cannot be expanded to cover mobile sports betting.
To be sure, the 2013 ballot did not – in any capacity – mention mobile sports betting. Yet, Governor Cuomo and pro-legalization legislators seem to be relying on an expansive definition of casino gambling that would encompass mobile sports betting. In essence, these proponents argue that, because the servers processing the bets will be located at the constitutionally-authorized casinos, mobile sports betting falls “under the umbrella of casino gambling.”
But, despite the 2013 amendment, the New York Constitution still bans bookmaking, pool-selling, and certain other forms of gambling. A prospective plaintiff could argue that the 2013 amendment does not grant sufficient latitude to the legislature to authorize sports betting generally. In other words, these plaintiffs could claim that the “casino gambling” exception from 2013 did not repeal the constitutional ban against bookmaking and pool-selling. If one assumes that bookmaking and pool-selling are synonymous with sports gambling—a reasonable assumption—the 2013 legislation outright violates the New York Constitution, notwithstanding the 2013 amendment.
Even if the state can effectively argue that sports gambling is not the same as bookmaking and pool-selling, any lingering ambiguity would likely lead a court to side with the plaintiff. Last year, in White v. Cuomo, a New York court stated that “[b]ecause [p]ublic policy continues to disfavor gambling, exceptions to the constitutional prohibition on gambling must be strictly construed.”
What does all of this mean for the future of mobile sports betting in New York? It might be a while before New York can cash in.