Thoroughbred groups present united front on NY sports betting

By: Tom LaMarra

Posted: Jan. 24, 2018

Representatives of three organizations, including the New York Thoroughbred Horsemen’s Association, presented a united front regarding the prospect of sports betting during a lengthy Jan. 24 hearing held by the Senate Standing Committee on Racing, Gaming and Wagering.

The hearing was held given the chance that the United States Supreme Court may rule favorably on a challenge by New Jersey to the federal Professional and Amateur Sports Protection Act, which bans sports betting in all but four states. New York legislators are looking for input in how wagering on sports betting could be structured and monitored.

NYTHA President Joe Appelbaum, New York Racing Association President Christopher Kay and New York Thoroughbred Breeders Executive Director Jeff Cannizzo told senators the state’s pari-mutuel industry has a long history of wagering, regulation and integrity, and that racing needs to participate should sports betting be legalized.

“We’re proud to sit here together and deliver a message that is consistent,” Appelbaum said. “Our industry knows something about sports wagering. We support all outlets that now do pari-mutuel wagering to be able to have sports wagering. The current system has integrity.”

Kay said it’s a natural extension for NYRA, whose advance deposit wagering system was designed to accommodate fixed-odds wagering, participate in the betting platform. He said NYRA and horse racing already operate within a state regulatory framework that would be necessary for sports betting.

“The New York Racing Association possesses more than 60 years of experience working under comprehensive state regulatory oversight to provide our loyal customers with quality wagering services,” Kay said. “It is because of that quality service and depth of experience that horseracing organizations like NYRA should be able to offer sports wagering within a continued framework of effective state regulation.

“To limit this service to casinos, who collectively possesses far less history and experience in New York, would disrupt long-standing relationships and deprive our residents of consumer choice. That is why we ask the state, when considering the future of sports gambling, to permit NYRA racetracks to offer this service to increase competition and consumer choice to provide the best possible wagering services for our residents.”

Appelbaum said the NYTHA “strongly supports extending sports wagering to the existing bet-taking system with its well-known history, integrity and participants.” He also said New York “has enough size and wealth” to have its own sports betting system rather than farm it out to other entities and vendors.

“New York has a unique opportunity to establish a modern wagering architecture designed to serve the residents of New York, support jobs and deliver a consistent revenue stream to state government,” Appelbaum said.

The racing representatives didn’t address the take from sports bets—it’s a low-margin wagering proposition—or an overall tax rate. Joe Asher, Chief Executive Officer of William Hill US, outlined the situation for the Senate committee.

Asher said the tax rate “needs to be reasonable.” He noted in Nevada, one of the four states in which sports betting is legal, casinos pay a 6.75% tax on sports betting. New Jersey, he said, is contemplating 9.25%, which is the general tax rate at its casinos.

Asher also said sports books must pay a quarter of a percent to the Internal Revenue Service, which amounts to another 5% off the top of gross revenue. Pari-mutuel operators are accustomed to charging a blended average of 20% per $1 bet on horse races.

“Any state tax rate that is much higher (for sports betting) makes it difficult for legal bookmakers to price the product competitively with the black-market operators, who pay zero in taxes,” Asher said. “Ultimately, these illegal operators, such as offshore websites and mob-connected bookies, will be the true competition when legal sports betting comes to New York.”

In his presentation, Dan Spillane, a Senior Vice President and Assistant General Counsel for the National Basketball Association, said the association supports passage of comprehensive sports betting legislation, either in Congress or a state-by-state basis. He also told New York lawmakers the NBA deserves compensation.

“To compensate leagues for the risk and expense created by betting and the commercial value our product creates for betting operators, we believe it is reasonable for operators to pay each league 1% of the total amount bet on its games,” Spillane said. “This approach draws from how sports betting is legally regulated in some other international jurisdictions, like Australia and France.”

In his comments, Asher questioned the 1% fee for sports teams, which he said amounts to another 20% of gross revenue taken off the top. He also said it’s important for sports betting operations to offer college sports so customers migrate from black-market operators.

The speakers all said sports betting should be available through mobile and online platforms, not just at brick-and-mortar facilities such as casinos and racetracks. Those gambling establishments, however, would provide the mobile services.

On the harness racing side, Tioga Downs Casino and Resort said it supports sports betting and would like to offer it as part of its overall gaming package. Meanwhile, Joe Faraldo of the Standardbred Owners Association of New York said the organization opposes sports betting because it would compete with video lottery terminals that generate revenue for purses, racing and agriculture.