New York Sports Betting Deadline Nears, Lawmaker Wants All Applicants Licensed

Posted on: October 25, 2021, 04:35h. 

Last updated on: October 25, 2021, 12:00h.

Steve Bittenbender Read More

Expertise: Legislation, Sports Betting, Horse Racing.

Monday is a big day for New York mobile sports betting. Bidders must tell the state’s gaming commission if they can work with the tax matrix that was released last week.

Once 5 pm ET hits, it will then be up to state officials to review the proposals and determine the right number of licenses to be issued. In all, the state received six bids. Combined, that represents 12 platform providers and 14 operators, although several companies are offering themselves in both capacities.

At a minimum, the state will award a contract for at least two platform providers and four sports betting operators.

New York’s New Frontier for Sports Betting

On Thursday, one key New York lawmaker said he wants the state to take a big tent approach with sports betting.

“We have the opportunity to have the largest and most exciting sports betting industry in the country, and so I am excited that the Gaming Commission is moving forward with the mobile sports betting licensing process,” tweeted Assemblyman Gary Pretlow, D-Mount Vernon, who chairs the Assembly Committee on Racing and Wagering.

While the former governor had a very limited vision for how a sports betting market could operate in New York, we now have the opportunity to get this right. We should license all applicants and allow them to compete for the business of New Yorkers,” Pretlow continued.

Pretlow is referring to former Gov. Andrew Cuomo, who resigned in August. He was undone because of a sexual harassment scandal and the looming threat of impeachment over that and other controversies in his administration. Cuomo, who had held off on backing mobile sports betting, became more receptive in the past year, as the state was staring down massive budget deficits due to the COVID-19 pandemic.

Licensing all of the companies that applied will achieve the Legislature's original vision for the sports betting market, and is explicitly envisioned and allowed under the law that was enacted.

— J Gary Pretlow (@JGPretlow) October 21, 2021

Crunching the Sports Betting Numbers

While Pretlow’s statement is admirable and desirable from a consumer standpoint, it’s not likely that the state will follow that line of thought, even with Cuomo out of the picture. The state’s bottom line is to maximize revenue potential, and projections have called on the state to generate up to $500 million annually in sports betting revenue once the state’s market matures.

Based on the tax matrix, if the state were to award to all applicants, the established tax rate would be 35 percent. That’s below the stated goal of 50 percent or more, which was used as the benchmark by the gaming commission to score proposals.

If state officials doing their analysis determine that additional licenses are warranted, the tax rate will drop.

If the state selects eight platform providers and nine operators, the tax rate would go to 51 percent. Going to nine platform providers and 11 operators would drop it to 50 percent, and it would stay there if the state wanted to add one more provider and operator.

As the tax rate drops, the state would be in a position to gain more upfront licensing fees. The RFP calls for each platform provider to pay $25 million for a license. So, issuing licenses to 10 providers who would manage 12 operators would generate $250 million in licensing fees while maintaining a 50 percent tax rate.

That said, as the state adds more licenses beyond, perhaps, nine platform providers, it would be adding more operators who will not likely attract more bettors or revenue. Based on data from other states, FanDuel, BetMGM, and DraftKings would likely account for at least 70 percent of the market.

The reward for sports betting platform providers in exchange for the high rate is a longer license. At 50 percent or higher, providers would get a 10-year license. The term is just five years at 35 percent. Regardless of the length, platform providers will pay $25 million for the license.

Big Names in the Running for New York Licenses

The applicants for the platform provider licenses are (the participating operators are in parentheses):

1. Bet365 (Bet365)
2. Kambi (Fanatics Sportsbook, Penn Sports Interactive – Barstool Sportsbook)
3. FanDuel, Bally Bet, BetMGM, and DraftKings (FanDuel, Bally Bet, BetMGM, and DraftKings)
4. FOX Bet (FOX Bet)
5. Kambi, Caesars Sportsbook, Wynn Interactive, and PointsBet (Rush Street Interactive – BetRivers, Caesars Sportsbook, Wynn Interactive, PointsBet, and Resorts World)
6. theScore Bet (theScore Bet)

According to the timeline in the solicitation, the gaming commission is expected to select applicants under consideration before Dec. 6. The awards would take place at the following commission meeting.

No next gaming commission meeting is presently scheduled.