Latest update on NY sports betting: NY mobile betting apps will launch on January 8, 2022. The answer to the question about competitiveness has been answered. A total of 9 betting apps will be approved, with 4 of those apps launching on day 1.
New York State Assemblymember J. Gary Pretlow wants the Empire State to have a competitive mobile sports betting market. But he seems unconvinced that is what New Yorkers are going to get, at least in the short term.
“New York received bids from a large number of well-qualified companies, and I think it would be a mistake for us to limit the market to a few participants when we have the opportunity to have so many companies competing to provide New Yorkers with the best experience,” Pretlow wrote in a Thursday tweet.
It was a subtle rebuke of a New York state regulatory process that began after mobile New York sports betting was legalized through the state budget process in April 2021. The process rewards bidders who are willing to pay a high tax rate to enter the New York market — with the highest proposed rates so far linked to the smallest number of sportsbook operators.
That appears to concern Pretlow, who worked for years to bring mobile sports betting to New York as Chair of the House Committee on Racing and Wagering. His Senate counterpart Joe P. Addabbo Jr., who chairs the Committee on Racing, Gaming, and Wagering in the upper chamber, has also expressed doubts.
“We’re not maximizing our potential in a very competitive environment,” Addabbo told The Journal News in Sept. 2021.
Final bids are expected to be awarded by the New York State Gaming Commission around Dec. 6, 2021.
Also Read: Connecticut keeps adding sports betting options for New Yorkers
NY Mobile Sports Betting Bid Process: Who Does It Benefit?
A final tax rate matrix released by the NYSGC on Oct. 19 shows a top proposed tax rate of 64 percent on gross gaming revenue for two sports betting platforms paired with four or five operators. As the number of operators increases, the proposed tax rate shrinks, with a bottom rate of 35 percent corresponding to any bid with 13 or more operators.
It’s a system designed to benefit the highest rate payers based on how applicants vying for a New York mobile sports betting license are scored. The higher the proposed rate, the higher the applicant’s final score, which may mean the difference between a mobile sports betting license or no license. The NYSGC explains the process in the regulatory RFA released on July 9, 2021.
Here’s how it works:
- An applicant that agrees to pay 50 percent in tax on their mobile gross gaming revenue gets 20 points toward their final score, plus an additional point for each percentage point over 50 percent. Fewer points are awarded for proposed tax rates under 50 percent.
- An applicant’s final score is computed by adding their Technical Factor Score (expertise, etc.), their Pricing Factor Score (factored from their proposed tax rate), and five bonus points if they share revenue with a tribal nation.
- In the event of a tie, applicants with a higher Pricing Factor Score are ranked higher, giving them a better shot at a mobile sports betting license.
Once the final tax rate matrix is released, the field has been narrowed, with the final matrix as the rates applicants must meet to stay in the running. If an applicant falls short, it has five business days — now until Oct. 25, 2021 — to amend its proposal to conform with the final tax rate matrix.
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Licensing Options Beyond 50 Percent
A proposed tax rate of 50 percent will keep an applicant in the running for a license, but it’s not the only way to get in the New York mobile sports betting market. Applicants can be awarded a license for three, five, or 10 years, based on the final tax rate matrix.
That said, any licensee paying less than 50 percent tax will pay more for a license. The fee for a New York State mobile sports betting license will be $25 million no matter the term, with those paying a 50 percent tax rate licensed for 10 years. Licensees with a tax rate between 12.5 percent and 30 percent will pay the same fee for three years. Five-year licenses will correspond to a tax rate between 30 percent and 50 percent.
Only the platform provider — not the operator — must be licensed under NYSGC rules and state law.
It’s uncertain how many licensees the NYSGC will award. At least two platform providers and four operators must be licensed under New York state law, but that’s a minimum. So, it’s possible that the market could end up being much more competitive than some expect.