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New York Could Soon Legalize Sports Betting: A Look At Potential Winners And Losers

New York has been one of the big storylines in the online sports betting industry with the state considering legalizing the market in 2021. News out on Tuesday show that the state could be close, but it may not be what everyone wanted.

What Happened: New York could approve a limited-operator online sports betting model that was backed by Governor Andrew Cuomo. The system was opposed by state lawmakers who wanted a different system in place.

Online sports betting could be passed as part of the 2022 budget, according to Action Network.

The New York Lottery will issue requests for proposals from two mobile betting operators who will subcontract out licenses, or skins, to four sportsbook operators.

“When the budget ends, that’s when the work starts,” New York Senator Joseph Addabbo told Action Network.

Follow-up measures will be announced soon. Officials for the state say online sports betting could launch by September, in time for the 2021 football season.

Potential Winners: New York lawmakers had proposed a plan for 14 online licenses for the state. This total came from two licenses for each of the four in-state casinos and two licenses for each of the state’s tribal casinos.

Action Network names DraftKings (NASDAQ: DKNG), Fanduel, bet365, and Rush Street Interactive (NYSE: RSI) brand BetRivers as companies that could bid on the limited licenses.

With a possible limit of four to six skins in the state of New York, the companies that can acquire the skin could see their shares trade at a premium. With less competition, market share in New York could be more closely watched than states with double digit operators.

Online sports betting is expected to make up more than 90% of the state’s betting handle, which could top billions of dollars monthly, according to Action Network.

Related Link: New York Represents A Huge Opportunity For Sports Betting: Here’s What Could Be Next 

Potential Losers: Details aren’t entirely clear who is allowed to bid on the limited number of licenses that New York would offer.

Action Network said it’s not clear if second skin partners like Penn National Gaming (NASDAQ: PENN) or PointsBet can bid. MGM Resorts International (NYSE: MGM) could also be excluded from the bidding process.

Under the proposed terms, in-stadium betting at kiosks would be excluded. This would be a negative for a company like Madison Square Garden Entertainment Corp (NYSE: MSGE), which owns and operates its namesake venue that hosts the New York Knicks and New York Rangers.

Tribal casinos in New York are not happy with Cuomo’s plan, which could lead to legal challenges and delay the launch of online sports betting in the state.

Companies like Caesars Entertainment (NASDAQ: CZR) and Fox Corp (NASDAQ: FOX), which signed deals with tribal casinos, could be excluded from statewide mobile wagering.

© 2021 Benzinga does not provide investment advice. All rights reserved.

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