• Status of Online Sports Betting in New York
  • June 5, 2019
  • Law Firm: Goldberg Segalla LLP - Office
  • New York’s legislature approved back in April 2019 the 2019-20 state budget of $175 billion. Notably, while provisions had been considered for inclusion into the budget regarding online sports betting, lawmakers ultimately nixed the issue from the final version of the budget.

    Background

    To date, the most obtrusive hurdle to overcome in the eyes of the legislators is the New York State Constitution. While Governor Andrew Cuomo has no opposition to limited, on-site sports betting at particular upstate casinos, he has consistently maintained that a constitutional amendment would be needed to authorize mobile sports betting in New York.

    Essentially, like other state constitutions, New York’s prohibits any expansion of gambling without an amendment. The crux, then, is whether online and mobile betting constitutes an “expansion of gambling,” or whether it in fact simply serves as a new implementation of an existing game. On this issue, legislators – including primarily Senator Joseph Addabbo Jr. and Assemblyman Gary Pretlow – are leading a faction that disagrees with Cuomo’s insistence, arguing instead that the state constitution needs no referendum at all.

    Five Reasons Why No Amendment Is Needed

    Most recently, the New York State Senate held a public hearing on sports betting in New York. Notably, Chairman Addabbo requested that Daniel Wallach, a leading sports wagering and gaming lawyer in the United States, address the issue of whether mobile sports betting in New York would require an amendment to Article I, Section 9 of the New York Constitution.

    Breaking this down into five primary compelling reasons that support the notion that legalization necessitates no amendment, Wallach explained:

    1. The New York Constitution addresses only substantive gaming categories, rather than delivery channels. Specifically, the internet serves as merely a channel of distribution for the delivery of goods and services as opposed to a substantive gambling category as referred to in Article I, Section 9.
    2. Article I, Section 9 includes language specifically empowering the legislature to “authorize and prescribe” how wagering on constitutionally-permitted forms of gambling will be conducted. Essentially, Wallach points out that this language affords the legislature with the discretionary authority to define the scope of activities that may be conducted by the state in conducting a lottery, horse racing facilities, or licensed casinos.
    3. In 2006, the legislature already approved online and mobile wagering on horse races. In each of the state’s five off-track betting corporations, mobile wagering is now offered; constitutional amendments were not necessary for these developments, as off-track betting, simulcast wagering, and mobile betting were merely new means to offer the same form of gambling that was previously allowed.
    4. New York’s highest court has held that the language of Article I, Section 9 does not bar the modernization of constitutionally-authorized forms of gambling. Wallach points to the Court of Appeals’ decision in Dalton v. Pataki, wherein the court considered whether the legislature’s authorization of video lottery terminals fit within the constitutional exception for state-operated lotteries. Per the court, “[i]t is of no constitutional significance that the tickets are electronic or paper. The particular methods for conducting the lottery are subject to change with time. The language of the constitution is not so rigid as to prevent this type of modernization.”
    5. Treating mobile bets as if they were placed at the casinos is consistent with basic contract law and is widely followed in the context of gambling. Relying upon similar precedent, Wallach rationalizes that once a mobile bettor places a wager and the server accepts the wager, in that moment a contract is created at the physical location of the server; as such, the casino would constitute the place at which the sports wagering has actually occurred.
    It will bear monitoring to see how – if at all – the testimony given at this public hearing will ultimately change New York’s approach to conform more along the lines of other states’ transitions into the legalization of sports gambling.