(The Center Square) – The New York State Gaming Commission is scheduled to meet Monday afternoon, and it’s expected that the highly anticipated mobile sports betting licenses will be awarded.
The agenda for the commission’s 1:30 p.m. meeting includes the consideration of licensing recommendations. It also will include consideration of mobile sports betting regulations.
The meeting packet on the commission’s website does not include a list of recommended licensees. However, The New York Post reported earlier this week that at least two bidding groups totaling nine operators would be selected.
According to the article, the likely winners include FanDuel, Bally Bet, BetMGM, and DraftKings. Those four companies bid as a group. Another group led by Kambi Group and featuring Rush Street Interactive, Caesars Entertainment, WynnBet, PointsBet and Resorts World is also likely to be recommended.
If those two groups, which combine to offer eight platform providers and nine sports betting operators (some entities will serve in both roles), are the only awardees, then the tax rate on gross sports betting revenues will be 51 percent.
The high tax rate is the brainchild of former Gov. Andrew Cuomo.
State lawmakers had proposed a more traditional licensing process involving casino partnerships with sports betting operators. However, Cuomo came out with another proposal that he said would generate more revenue for the state.
He floated the idea as the state faced a multi-billion dollar shortfall from the COVID-19 pandemic.
Under his proposal, which he negotiated into the state budget that passed in April, the gaming commission would award the licenses through a competitive bid process.
The NYSGC released a solicitation in July and received bids in early August. The bidders were responsible for proposing the tax rate. And the solicitation’s scoring system favored bidders willing to share at least 50 percent of revenues with the state.
On a conference call Friday morning to discuss the company’s third-quarter results, DraftKings CEO Jason Robins would not confirm The Post’s report, only saying he hopes the report was true.
While Penn National Gaming President and CEO Jay Snowden told investment analysts Thursday that he didn’t think sports betting would be profitable in New York, Robins said he felt otherwise.
“There’s a lot of levers we can pull, such as cutting back on rate of promotion and spending less on external marketing,” Robins told analysts Friday. “Those are things I would expect everyone in the industry would do because I don’t think anyone is going to want to run at a long-term unprofitable rate in any state. Certainly, early on, we will approach it just like we do other states where we’ll invest into it and look for that two-to-three-year path to profitability.”
In addition to the high tax rate, every winning platform provider will pay a $25 million fee for the license. Based on The Post’s report, that will generate at least $200 million in fees alone.
In exchange for the 51% rate, the state would guarantee the license for 10 years.
Penn National’s Barstool Sportsbook was a bidding partner with online retailer Fanatics in a second bid by Kambi. Other submitters included Bet365, FOX Bet and theScore Bet.
Two weeks ago, the gaming commission sent the bidders the final tax matrix and told the applicants if they did not agree to the tax structure, then their bid would be disqualified. They gave them a week to consider the offer.
Accepting the tax rate, though, did not guarantee a license. Evaluators scored proposals to identify the winning bid and then conducted a market analysis to determine if more offering more licenses were in the state’s interests.
The tax rate dropped as the state extended more licenses. In addition, the state reduced the length of the license if the tax rate dropped below 50%. However, the fee would remain $25 million.
If the Gaming Commission awards licenses and approves the regulations, sports betting proponents are hopeful the operators would be able to launch in the state by the Super Bowl.
With a population of nearly 20 million people, New York would be the second-largest state population-wise to launch mobile sports betting. Florida became the largest state so far with the soft launch of the Hard Rock mobile sportsbook, which is owned by the Seminole Tribe of Florida, on Monday – although that rollout faces a legal challenge.
Experts believe that New York, though, would quickly become the top legal sports betting market in the U.S. once mobile apps launch there.
State officials hope to generate up to $500 million in revenue annually from sports betting.