Back in July of 2021, when New York leaders were hammering out the details of legalizing mobile sports betting in the country’s fourth-biggest state, a debate arose between pro-gambling legislators and then-Gov. Andrew Cuomo.
The legislators, primarily state Sen. Joe Addabbo and Assemblyman J. Gary Pretlow, chairmen of their bodies’ respective gaming committees, wanted the state to issue a large number of licenses to ensure the process would be fair and inclusive. Cuomo wanted to limit its scope, wary of opposition, while maintaining one of the highest tax rates on such activities in the nation to ensure a robust tax haul for the state.
Cuomo initially wanted to issue just four licenses, but the legislators were able to push the eventual number to nine, where it has stood since, along with a 51% tax on gross gaming revenue (GGR), highest in the nation.
One group that got left out when legal, regulated sports betting launched on Jan. 8, 2022, in New York: the state’s Native American tribes, which had been active in New York gambling for more than 25 years. Pretlow and Addabbo had a series of meetings with leaders of the Mohawk, Oneida, and Seneca tribes at the time, as there were concerns as the process moved along that they weren’t being given proper access to what could prove a golden goose.
“Our plan gave them a seat at the table. Now they just have entrance into the room,” Pretlow told Sports Handle’s Matt Rybaltowski at the time. “It’s kind of unfair to them.”
New bill could offer second chance to tribes
New York turned into every bit the sports betting behemoth industry observers expected, with the state’s bettors risking $16.2 billion in wagers in the 2022 calendar year and with sportsbook operators clearing about $1.36 billion combined in GGR, giving the state nearly $700 million in new taxes. In just 12 months, New York moved into fifth place on the all-time post-PASPA sports betting rankings by state. Quite simply, it has become the mobile sports betting capital of the country.
And the tribes didn’t see a penny of that money, while the state may have missed an opportunity to garner even more tax dollars while lowering the tax rate to appease operators. Now, Addabbo and Pretlow think they may have a mechanism to give the tribes access to the windfall of sports betting revenue while potentially keeping total state tax revenue steady, if not increasing it.
Last week, Addabbo introduced SB 1962, which would expand the number of sports betting operators from nine to 14 by New Year’s Day of 2024 and to 16 by the following Jan. 1. Along the way, the tax rate would decline to 35% next January and to 25% the following year.
When asked if he hoped the tribes would get a second chance to enter the sports betting fray after he introduced the new bill, Addabbo replied, “Of course.”
“When Gary and I did the first mobile sports betting bill, we had everybody in the tent: Native Americans, kiosks, racetracks, stadiums, under the belief that access would be one of the key aspects for success,” Addabbo said. “I just think it’s the right thing to do to be inclusive. This could give them an opportunity to opt in. Yes, their servers would have to be on our land, but that gives us the opportunity of making money off their bets, which is something we don’t normally do.”
Changes in NY could have national implications
Federal law prohibits states from taxing gambling money the tribes bring in off their Class III gambling licenses, but Addabbo said the state may be able to work around that prohibition if the tribes agree to place their servers on state land. Indian tribes and their wholly owned entities aren’t subject to state income taxes.
“We were in a good place with the Native Americans and, somewhere down the line, maybe we will be again,” Addabbo said. “I knew there were opportunities to partner with someone and maybe the opportunity will exist down the line. The only way to solve or satisfy the state constitution is to have the server on our land. That would be the first time in my recollection we’ve made money off their bets.”
Tribes with gambling interests across the nation will be watching what happens in New York if Addabbo’s bill passes. According to Kathryn Rand and Steven Light of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota, tribes have two primary models to gain access to sports betting: by relying on existing compacts or by working with state governments and private entities to establish betting operations off tribal land, which fits Addabbo’s definition.
In Washington state, sports betting is limited to in-person bets placed at tribal casinos. In Arizona, the state issued licenses to tribes to operate online sportsbooks. The Oneida Indian Nation, the Saint Regis Mohawk Tribe, and Seneca Nation already offer retail sportsbooks under the compact model after New York authorized in-person sportsbooks in 2019.
Now, the tribes could have a chance to get into the growing world of mobile sports betting if Addabbo’s latest bill passes.