New York State Of Nine: Gaming Commission Selects Sports-Betting Operators

November 9, 2021
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The New York State Gaming Commission has selected nine operators to offer mobile sports betting in the most coveted market in the United States, with bet365 and Penn National's Barstool among those failing to secure a license.

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The New York State Gaming Commission has selected nine operators to offer mobile sports betting in the most coveted market in the United States, with bet365 and Penn National's Barstool among those failing to secure a license.

After receiving six bids this summer, the commission on Monday selected both of the two major consortiums that submitted joint applications, creating a nine-operator field that will be subject to a 51 percent tax rate and contain many of the U.S. sports-betting market’s biggest names.

The winning bidder, the commission confirmed, was the Kambi-backed group that included Caesars Sportsbook, WynnBET, PointsBet, Rush Street Interactive and Resorts World.

Although full details of the scoring used to select winners has yet to be released, the consortium boosted its bid by offering to pay a 64 percent tax rate on revenues if the commission would have chosen its bid alone, as well as the aforementioned 51 percent rate if regulators chose up to nine operators.

“We’ve been looking forward to the opportunity to bring mobile sports betting to New York,” said Tom Reeg, CEO of Caesars Entertainment. “With more than 19m people, New York will be the biggest mobile sports-betting market in the country, and we feel we are uniquely positioned to bring an incredible product to that market.”

Through the unique bidding process, the six-member commission was empowered to choose additional operators after selecting the initial winner, provided that those operators qualified with a set score on their technical capability and the commission felt that it would be in the best interests of the state to also select them.

As a result, the commission also selected the consortium of FanDuel, DraftKings, BetMGM and Bally’s after the group agreed to match the Kambi group's proposed tax rates.

“We would like to thank the New York Gaming Commission as well as congratulate them for keeping to their timetable,” BetMGM CEO Adam Greenblatt said Monday.

“New York has the potential to be one of the largest sports-betting markets in the U.S. and BetMGM is particularly well positioned to become a leader in the state given the strength of the M life customer database, close proximity of Empire City Casino to support our omni-channel strategy and parlaying our already leading positions in nearby states.”

Combined, the nine operators include eight platform providers, which are each required to pay a $25m license fee to the state.

That will result in an immediate $200m in upfront revenue, in addition to the 51 percent tax, by far the highest rate in any jurisdiction in the U.S. that features a competitive sports-betting market.

Each of the operators will receive a ten-year license, as well as a temporary conditional license that allows them to launch when they are permitted to do so by the commission.

The commission ultimately did not select the only other bid to meet the minimum qualification score, which was submitted by bet365, despite the company also agreeing to pay what would have been a 50 percent tax rate if the commission added the tenth operator.

“The committee was unable to make a positive determination that an additional license award to bet365 would be in the best interest of the state, as the totality of the information reviewed could not support a finding that their licensure would expand the mobile sports wagering market and increase the aggregate revenue to the state,” said Robert Williams, the commission’s executive director.

Among the bids ineligible for selection due to failing to meet the minimum technical score were the individual bids submitted by Penn National's theScore and Flutter's Fox Bet, as well as another joint bid backed by Kambi featuring Penn's Barstool Sportsbook and sports retailer Fanatics, which has yet to operate in any other jurisdiction.

“I feel like I’ve done more for the state of New York and business here in New York than any of the other companies combined,” said Barstool founder Dave Portnoy on a YouTube stream after the decision was announced. “We didn’t get it; that’s bullsh*t.”

Selected operators will also have to reach an agreement with one of the state’s four upstate casinos to construct a server room at one of the facilities, with the commission having the right to force a casino to store the servers if terms cannot be reached.

Each of the upstate casinos will receive a $5m annual payment, plus “reasonable and actual” costs to house and secure the servers.

Legislators have pushed for the state’s sports-betting market to be operational in time for the Super Bowl in February.

“With New York moving closer to the goal line to witness its first mobile sports bet, we must remain focused on providing a premier product and giving New Yorkers the best mobile sports-betting options in order to effectively compete with neighboring states like New Jersey,” said Senator Joseph Addabbo, the Senate’s point man on sports betting.

However, Williams said Monday that the launch date is effectively in the hands of how soon the operators can check off the needed boxes before launch.

“At a practical level … it will be in the control of the recommended bidders when they become operational and get to market,” he said.

In another action taken during its meeting on Monday, the New York commission also approved final regulations for mobile sports wagering, having last week completed a comment period on draft rules that were published in July.

The final regulations include relatively few changes and will continue to require use of official league data, unless the commission can be satisfied that data from alternative sources is reliable.

Among other restrictions, operators will also have to submit all sports-betting promotions for pre-approval by the gaming commission at least 15 days in advance, and free bets and bonuses cannot be deducted from taxable revenue unlike in Pennsylvania, Michigan or several other states.

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