Allowed number of sports betting skins could be an issue for GNOG-Tioga deal

Golden Nugget Secures Path Into New York Through Tioga Downs Deal, Yet Prospects For The State Remain Unclear

New York iGaming is still a long way off, yet the market’s potential is such that operators are already lining up to obtain access. One of the latest such deals is a partnership between Golden Nugget Online Gaming (GNOG) and Tioga Downs Racetrack.

For now, this collaboration is more speculative than practical. There is no momentum in NY to legalize any sort of online gambling other than sports betting, and that effort’s prospects are uncertain. Even if online sports betting does eventually become legal in NY, that vertical hasn’t been a big one for GNOG to date.

The details on the Golden Nugget Casino New York venture

Golden Nugget makes no bones about its appetite to get into NY. It feels that a hypothetical online casino market in the Empire State could be worth $2 billion annually at maturity.

The GNOG-Tioga deal covers the next two decades. Tioga Downs will receive a percentage of any future net revenue GNOG might earn in the state. In return, it promises market access for a Golden Nugget Online Casino skin under Tioga Downs’ gaming license. All of this, of course, is “subject to legislation, regulatory approval, license eligibility, and availability.”

None of those words are redundant. In order for the deal to mean anything, New York will have to clear each of those hurdles. The legislative part is the immediate concern.

The legal landscape for online gambling in NY

Right now, the totality of legal online gambling in NY consists of daily fantasy sports and free-to-play pools, sweepstakes casinos, and the state lottery. Sports betting is legal, but only in the form of retail sportsbooks.

Many in Albany, including Gov. Andrew Cuomo, want to see some expansion soon. Currently, the only thing on the table in that regard is online sports betting. There are several competing ideas for its implementation, however.

Cuomo wants a system identical to that which nearby New Hampshire employs. There, the state lottery is the sole online licensee. It has a contract with DraftKings to operate sports betting on its behalf. Cuomo has suggested that offering online sports betting that way will mean a bigger cut of revenue for the state.

There are few supporters of Cuomo’s state-run monopoly plan in the legislature, however. Neither are the NY Assembly or Senate on the same page. For example, an online sports wagering bill passed the NY Senate last year, but never even came up for a vote in the Assembly.

That bill only allowed for only one skin per license. If that ends up being the framework for online sports betting in New York, it could pose a threat to what Golden Nugget is looking for in its deal with Tioga Downs.

A single-skin rule could create a conflict for Tioga

A potential issue is that Tioga Downs already has an existing partnership for retail sports betting with FanDuel. If the single-skin framework becomes law in regard to online sportsbooks, the casino would have no availability for GNOG to offer sports betting under Tioga Downs’ license.

How much of an issue this would be depends on whether GNOG wants to have an online sportsbook in NY at all. There’s no mention of such in the announcement of the Tioga deal.

It also depends on how the state approaches potential future online casino legislation. A single-skin restriction for sportsbooks might not imply the same for iGaming. Both New Jersey and Pennsylvania allow a greater number of skins for online casinos than for sportsbooks.

Even in a hypothetical single-skin iGaming landscape, Golden Nugget may have the upper hand. FanDuel’s deal with Tioga Downs seems to only cover sports betting, while Golden Nugget’s is explicitly for online casino wagering. Thus, it may be FanDuel Casino that could be on the outside looking in, although it would surely lobby against such an outcome.

A possibility that would give Golden Nugget greater control of its fate in the state would be to seek a casino license of its own. That would essentially give it room to take its products online as well. The NY Constitution gives the state government the ability to sell up to seven commercial casino licenses. To date, it has only issued four, and seems in no apparent rush to award any of the others.

It could take a lot of time for Golden Nugget to obtain one of those licenses and build a brick-and-mortar property. However, a similar amount of time will likely pass anyway before online gambling becomes legal in the state.

Is a retail presence necessary for online dominance?

Golden Nugget has become the dominant operator on the online casino scene across the border in New Jersey. And yet, it has debuted near the bottom of the heap in Michigan. Very preliminary returns there have GNOG’s market share at just a few percentage points.

There are a few possible reasons for this, but one in particular seems obvious. Golden Nugget has a retail property in Atlantic City, but no comparable presence in Detroit. That said, it’s too early to make assumptions about how the Michigan market will shape up, as online gambling only began on January 22 this year, and only ten days worth of revenue data are available.

If those early numbers hold, however, it’s worth questioning whether Golden Nugget would need some kind of physical presence in NY to compete on the same level it does in NJ. Along with the legislative uncertainty, this makes for a deal which could equally turn out to be huge, or amount to very little.

- Derek Helling is a lead writer for PlayUSA and the manager of BetHer. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.
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