The revenue stress that the state of New York feels this year could be harsher than other states. New York has seen a higher incidence of cases and businesses have come to a standstill. With massive budget shortfalls in the future, a municipal bond manager is urging the state to turn to online sports betting to help the state’s balance sheet.

A state in trouble

The New York State Division of the Budget forecasts that it would be facing a $13.3 billion fiscal revenue drop in 2021. Till 2024, this deficit could be extended to $61 billion. Jim Colby, a VanEck municipal bond portfolio manager, and strategist said that the state is facing drastic budget issues. He said that online sports betting could provide a sin tax revenue system. Other states have already highlighted the vast opportunity in this sector.

Colby wrote in a recent note,

“We believe New York showcases an opportunity, seen by many states nationwide, for the adoption and taxation of online sports betting. The appetite for gambling within New York and nationwide is, in our view, strong, but it is not yet fully realized by state and local municipalities.”

The current situation in New York

The state has already legalized sports betting but it does not permit mobile and online betting yet. All bettors have to move to the brick-and-mortar sportsbooks located in the Northern region of the state to place their bets. They also have a choice to move to the neighboring New Jersey where there is a flourishing sport betting market that allows mobile and online sports betting.

New Jersey has already taken a lead in sports betting in the nation. The state’s gambling handle was relatively less affected compared to other states because of its extensive online betting and gaming opportunities. Other markets, like New York, witnessed the closure of its land-based sportsbooks and casinos because of which their revenues were affected more harshly during the pandemic.

Colby notes that New Jersey generated $7.24 in sports betting tax revenue per capita as compared to $0.05 for New York. He suggests that if the state is allowed to conduct sports betting online, the difference could be lessened. According to research from Eilers & Krejcik Gaming (EKG), New Yorkers drove about $837 million of the state betting handle of the Garden State.