The New York Gaming Commission is close to awarding mobile sports wagering bids to two consortiums made up of the most prominent names across the U.S. sports betting industry, multiple sources told Sports Handle Tuesday night.
At the same time, a second consortium headlined by Kambi, a B2B platform provider of sports betting technology, appears to have emerged as the second successful bidder, sources indicate. The Kambi-led bid consists of five operators: Rush Street Interactive, Caesars Entertainment, PointsBet, Wynn Resorts, and Genting, which owns Resorts World.
The story was first reported Tuesday evening by the New York Post. According to the Post, New York is on track to go live with mobile sports betting before kickoff of Super Bowl LVI in February. The commission, over the summer, set a tentative target around Christmas Day for awarding bids to a minimum of two platform providers and four mobile sports betting operators.
An announcement this week would be about seven weeks early. The expedited timeframe should provide music to the ears of state Sen. Joseph Addabbo Jr., who has urged the commission to get mobile sports betting up and running by the Super Bowl, at the latest.
“If the reports are confirmed and true, New York could begin to realize revenue, educational funds, jobs, and new funding streams for addiction programs and youth sports before the February Super Bowl,” Addabbo told Sports Handle via text Tuesday night.
Final tax rate matrix
In a somewhat surprising development Oct,. 20, the commission released its “final tax rate matrix” for the intricate bidding process, raising some concerns among the sports betting industry that the state could assess a tax rate above 60% on an operator’s grossing gaming revenue. Under the matrix, selected applicants would be taxed at 64% if the commission selected two platform providers and four operators to satisfy the state’s statutory mandate.
Under another scenario, the final tax rate dips to 51% if the commission selects nine operators in total. With nine operators, the rate would remain at 51% regardless of how many platform providers are selected, according to the matrix.
“The more brands the better, because an open market helps generate additional revenue, innovation, and protects the consumer,” Brendan Bussmann, a partner at gaming consultancy Global Market Advisors, told Sports Handle.
In January, then-New York Gov. Andrew Cuomo sent signals that mobile sports betting could be included in the state’s fiscal year budget. He identified the activity as a lucrative potential revenue source for the state, which at the time faced a historic deficit due to COVID-19. Soon after, Cuomo’s administration outlined a framework that it projected would generate annual tax revenue to the state of $500 million at market maturity.
The framework was largely patterned after a model in New Hampshire where the state granted DraftKings exclusivity on its online sports wagering market in exchange for a 51% tax on the company’s online gross gaming revenue. While New York has the nation’s fourth-largest population at 19.5 million, New Hampshire ranks near the bottom of all states at 1.4 million. The stark disparity has led numerous gaming experts to articulate why a limited-operator model may work in a smaller jurisdiction, but not in one of the nation’s most bustling markets.
“New Hampshire should have never been a model for New York, but unfortunately, it has become one,” Bussmann said.
Ambiguity on operator total
Questions still linger on whether a third application featuring bids from Fanatics and Penn Sports Interactive (Barstool Sportsbook) will be awarded a license, the Post reported. If additional operators are granted market access in New York, the tax rate will change accordingly. The tax rate would be 50% with a range of 10-12 operators under the matrix. The tax rate does not fall to 35% until a minimum of 13 operators gain access to the market.
— Bernadette Hogan (@bern_hogan) November 3, 2021
A spokesman for the commission did not respond Tuesday night to a request from Sports Handle for comment.
Under a comprehensive Requests For Applications (RFA) that governs the bidding process, the commission will charge a $25 million license fee per platform provider.