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New York Gaming Commission Releases Mobile Sports Betting RFA Eight Days Late

Commission outlines potential tax rates, scoring process for mobile sports wagering bidding process

Matt Rybaltowski by Matt Rybaltowski
July 9, 2021
in Regulation
New York Mobile Bidders

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The New York Gaming Commission issued a closely watched Request for Applications on mobile sports wagering Friday afternoon, assuaging concerns from major industry stakeholders that the state’s process for selecting several sportsbook partners could be more drawn out than initially anticipated.

The release of the 130-page document came eight days after the commission missed a mandatory state deadline to issue the mobile sports betting RFA by no later than July 1. The issuance of the RFA formally begins a competitive bidding process in which the commission will select a minimum of two platform and four mobile sports betting operators to partner with New York in running online sports wagering across the Empire State.

Last week, Sports Handle broke an exclusive story on the commission’s failure to meet the July 1 deadline, when one high-level industry source asserted the delay could take as much as two weeks. On Thursday night, a report surfaced that a revised version of the RFA would likely be reviewed by Gov. Andrew Cuomo’s administration before the end of the work week.

Earlier Friday, there were indications that the commission was nearing the finish line, with the possibility that the RFA could be released as soon as Friday afternoon, a source told Sports Handle. It is unclear if any last-minute discussions centered on the revenue-sharing plan or the tax rate a successful bidder will be required to pay in exchange for access to the New York online sports betting market, according to the source.

A Cuomo spokesman did not immediately respond to a request for comment.

A tax floor

The main takeaway from the release is that Cuomo may be successful in setting a tax floor of at least 50% of the company’s gross gaming revenue from its potential New York online sports betting channel for platform provider applicants. Language in the RFA comports with Cuomo’s desire for a tax rate of 50-55% , which he expressed during the budget negotiation process earlier this spring. The New York plan is largely patterned after a model in New Hampshire, where DraftKings pays the state lottery 51% of its statewide revenue from online sports wagering in exchange for exclusivity in the market.

Consider the language on the commission’s “pricing matrix and accompanying analysis” for the revenue-sharing plan with the state on Page 28 of the document.

Applicants shall complete and submit a pricing matrix, the form of which is set forth in
Appendix B: Pricing Matrix. This matrix requires the Applicant to set forth the tax rate that
an Applicant accepts under varying competitive scenarios of total Platform Providers and
Operators. An Applicant must provide a tax rate that is fifty (50) percent or greater for its
Preferred Scenario. However, if the Applicant’s Preferred Scenario alone is less than the
statutory minimum of two Platform Providers and four Operators, the Applicant must
instead provide a tax rate that is fifty (50) percent or greater for such statutory minimum
scenario. If an Applicant does not wish to participate in mobile sports wagering with
particular levels of Platform Providers and Operators, the Applicant should enter a tax
rate of 0 (zero). If a cell is left blank or unintelligible, such cell will be deemed to be a tax
rate of 0 (zero).

–Section 6.8. Pricing Matrix and Accompanying Analysis

The commission also outlined the comprehensive methodology it will use to score applicants during the bidding process. The scoring process will be determined by a litany of factors, most notably a platform provider’s experience in the U.S. sports betting market. Other technical factors under consideration include a provider’s speed-to-market capabilities and its marketing strategy.

Technical factors

  • Expertise in the market of the applicant and the applicant’s proposed operators —  25 points.
  • Integrity, sustainability and safety of the mobile sports wagering platform — 20 points.
  • Past relevant experience of the applicant and the applicant’s proposed operators — 15 points.
  • Advertising and promotional plans — 7.5 points.
  • Capacity to rapidly and efficiently bring authorized sports bettors into the applicant’s platform — 2.5 points.
  • Applicant’s efforts to foster racial, ethnic, and gender diversity in applicant’s workforce and each of the applicant’s proposed operators’ workforce — 2.5 points.
  • Other factors impacting revenue to the state — 2.5 points

The maximum cumulative score to be awarded for technical factors, according to the RFA, is 75. Only those with a technical factor score “at or exceeding 60 points out of 75 points” will be considered a qualified applicant, according to the RFA. The score excludes a five-point bonus given to any applicant that provides a revenue-sharing plan related to mobile sports wagering with a Native American tribe, the commission wrote.

Under a pricing-factor category, an applicant that submits a proposed tax rate of 50% will receive 20 points, according to the RFA. For each full percentage point over 50%, an applicant will receive an additional point.

Prior to the start of the year, none of the four largest U.S. states by population — California, Texas, Florida, or New York — had passed legislation on mobile sports betting. To date, only New York is moving forward. Florida lawmakers legalized and the state agreed to a pact with the Seminole Tribe, but that is still under review by the U.S. Department of the Interior. In addition, DraftKings and FanDuel are collecting signatures for a Florida ballot referendum that would legalize statewide mobile wagering for commercial operators. In California, a tribal referendum for retail-only sports betting will be on the November 2022 ballot, and the Texas legislature adjourned without action.

Litigation could derail online sports betting implementation in FL and NY as currently proposed. Assuming that happens, I'd consider it an apt coda to 2021—a year unlike any other I've witnessed in U.S. gambling policy.

— Chris Krafcik (@CKrafcik) July 9, 2021

At maturity, mobile sports betting in New York could bring the state up to $500 million in annual tax revenue, according to projections from Cuomo’s office. Cuomo, a three-term governor, claimed earlier this year that New York eventually could become the largest market in the nation.

The model has come under scrutiny from a number of sports betting industry stakeholders, who prefer an open market. The limited model, they contend, stifles competition.

“This RFA is all about the political class trying to further take a blender to the potential New York State mobile sports betting market,” an industry expert told Sports Handle on the condition of anonymity.

50% is outright comical. Government intervening where it doesn’t need to. I hope it gets revised downwards.

The inevitable result of this will be the consumer getting hurt with massive spreads in NY. https://t.co/b3MUMCcswq

— Capybara Capital (@capy_capital) July 9, 2021

Timeline for market launch

The release of the RFA on Friday begins a formal process in which platform providers must submit their applications to the commission within 30 days. The deadline will now drag into early August. From there, the commission is required to name the winning platform providers and mobile sports betting operators within the following 150 days from the time the final application is submitted.

Applications are due Aug. 9 at 4 p.m. ET, the commission wrote in the RFA. Oral presentations on the applications may begin as early as Sept. 1, the commission added, with the selection of applicants considered for licensure due by Dec. 6. The commission may provide notification to bidders requesting various amendments to the initial submissions. The amended applications are due one week after the notification is made, the commission wrote. The NYGC then intends on awarding the mobile sports betting licensees by the next scheduled commission meeting, which could take place later in December or in early 2022.

A host of the sports betting industry’s top players, including DraftKings, FanDuel, BetMGM, and Caesars/William Hill, are expected to submit applications in the coming weeks.

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Matt Rybaltowski

Matt Rybaltowski

Matt is a veteran writer with a specific focus on the emerging sports gambling market. During Matt's two decade career in journalism, he has written for the New York Times, Forbes, The Guardian, Reuters and CBSSports.com among others. In his spare time, Matt is an avid reader, a weekend tennis player and a frequent embarrassment to the sport of running. Contact Matt at matt@usbets.com.

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