Mobile Sports Betting Added To Budget In New York

Sites like DraftKings, whose customers mostly place bets through smartphone apps, will have to fork over some 50% of their New York profits directly to the state in tax, “We want to thank the legislature and Governor Cuomo for the progress made in bringing legal, regulated, mobile sports betting to New York,” said Griffin Finan, VP of government affairs and associate general counsel for DraftKings. “We look forward to learning more as the process continues to unfold.” FanDuel sang the same tune. “We are pleased to see this important step toward bringing legal, regulated mobile sports betting to New York achieved and are grateful for the leadership of the Governor and legislature,” FanDuel VP Chris Jones said. “We look forward to the next steps of the process and hope we are ultimately able to bring our FanDuel Sportsbook product to customers in our home state.”

Truist analyst Barry Jonas wrote that while New York's announced budget has included legalized mobile sports betting, the ultimate structure is "far from clear" and may "not disappoint" Governor Cuomo's prior intention to not help casinos make money. Jonas writes that the bill's language makes it difficult to handicap which companies ultimately participate in the NY market and that the two platforms with a minimum four skins structure may limit the market, adding that history would suggest that a Gross Gaming Revenue, or GGR-based, bidding process may not be conducive to profitability.

ANALYST COMMENTARY

Morgan Stanley analyst Thomas Allen upgraded Caesars (CZR) and MGM Resorts (MGM) to Overweight from Equal Weight this week after having visited Las Vegas. The analyst came away with the impression that consensus is "grossly underestimating" the earnings power of companies exposed to what he sees as a "fast, strong recovery." During his visit, numerous market participants told him their bookings were stronger than current occupancy and that booking windows were extending, Allen told investors, adding that in some instances he heard that bookings, gambling, and hotel revenues are already approaching 2019 levels. He has raised his 2021 EBITDA estimates for Caesars along with Boyd Gaming (BYD), MGM Resorts and Wynn Resorts by 7% on average, the analyst noted.

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William K. 1 month ago Member's comment

Quite interesting and also very disturbing. There was a good reason for restricting gambling before and it is still applicable. But besides the moral issues and consequences there is a financial issue. Every cent of that profit from gambling is money removed from the economy, where it could have been spent on buying goods and services produced by humans working at jobs. That is the ignored problem of even legal gambling, which is that it is taking money away from other segments of the economy. But all that the city government can see is the profit they can grub away from the gambling businesses.

So it appears that the benefits overall are a bit exaggerated.