Faced with a $15 billion budget gap, New York State Governor Andrew Cuomo has proposed the legalization of mobile sports gambling in his 2021/22 budget proposals, an idea budget officials estimate could bring in $500 million in annual tax revenues.
“The question is really not whether or not we do mobile sports betting,” Cuomo declared at one point of his week-long budget address. “The question is more, ‘How?’
One issue is whether wagers go through the state-run lottery system or through one or more private operators, which include casinos and online sportsbooks. Bills in both houses of the State Legislature would license multiple operators, such as the publicly traded DraftKings, and expand retail outlets beyond the four upstate commercial casinos to include betting kiosks at sports stadiums and Off-Track Betting sites.
But “this is not a money-maker for private interests to collect just more tax revenue,” Cuomo says. “We want the actual revenue from sports betting.”
Faced with a record-setting budget crisis, state lawmakers are eyeing a jackpot. Look no further than our neighbor to the south: New Jersey’s legal sports bets hit $6 billion in 2020, exceeding wagers placed in Nevada and every other state. And a February 2020 report by gaming research firm Eilers & Krejcik estimated that New Yorkers placed a whopping $837 million in bets in the Garden State in 2019, accounting for roughly 19 percent of that state’s betting handle
Sports betting started in Pennsylvania last July – since then, the state has collected over $2.5 billion in total wagers, yielding about $48 million in tax revenues.
Easy money, right
Not entirely. Like New York, virtually every state in the nation – financially devastated by COVID-19 – is looking to expand gambling opportunities and legalize recreational marijuana, the same way they filled budget holes a decade ago by championing taxes on cigarettes, booze, bullets and sugary soft drinks.
While politically convenient, these revenues are often inconsequential to large municipal budgets – and a 2018 study by the Pew Charitable Trusts called sin taxes a “tempting but unreliable source of revenue.”
It turns out that chasing losses in search of a big payday can get both governments and individuals in trouble.
In a given year, according to the National Council on Problem Gambling, 2 million U.S. adults – about 1 percent of the population – meet the clinical criteria for severe gambling problems. Another 4 million to 6 million (about 2 to 3 percent) have mild or moderate gambling problems, meeting one or more of the criteria and experiencing related problemsincluding family strife, job loss, anxiety, depression and even stress-related medical conditions such as hypertension, cardiovascular disease and peptic ulcers.
The NCPG pegs the annual national social cost of problem gambling at $7 billion, including healthcare and criminal-justice expenses, while also factoring in job loss, bankruptcy and other financial consequences.
Males, younger people, African Americans and those in lower income brackets appear to be highest risk populations for problem gambling, along with those struggling with depression. There’s also evidence that online and compulsive gambling have become more pervasive during the pandemic.
As for the number of problem gamblers in New York, well, that’s a good question. A February 2019 audit by State Comptroller Tom DiNapoli noted that New York “has not conducted a comprehensive needs assessment or social impact study to identify the number or location of individuals in need of problem gambling treatment services since 2006,” and that’s with four commercial casinos opening upstate in 2013.
A better estimate of statewide needs is due out by Dec. 1, 2023, but in the meantime, investigators at the University at Buffalo’s Research Institute on Addictions have found the rate of problem gambling doubles in populations living within 10 miles of a gaming establishment. Now imagine a casino in your pocket or on your nightstand, flashing and beeping for your attention all day long.
New York already collects about $3.7 billion a year from its traditional New York Lottery games, video lottery terminals, racetrack wagering, casinos – including Long Island’s own Jake’s 58 – and on-premise sports betting. Another state comptroller report, this one released in November, noted that New York spends and authorizes more than $272 million annually promoting gambling – but in the 2019-20 fiscal year, spent only $5.7 million on prevention, treatment and recovery services related to problem gambling.
Lawmakers will almost certainly approve mobile gambling in New York State. But they shouldn’t do so without considering – and actively mitigating – the social and economic impact of continuously expanding gaming opportunities.
They should work with app developers to implement secure ID verification, daily spend limits and other protections. They should accelerate the planned 2023 impact study and find a paltry $5 million to launch a public education campaign – heavily focused on social media and sports websites – to reach young male sports fans, who are most at risk. And they should double the state’s investment in problem-gambling treatment programs, including those based on Long Island, and ensure that a higher percentage of net revenues going forward is dedicated to remediating gambling-related harms.
That’s how we keep games fun – and hedge our societal bets.