New York Selects Nine Mobile Sportsbook Operators

Supporters of mobile sports betting in New York are one step closer to their first legal wagers. Last week, the New York State Gambling Commission selected nine operators split between two consortiums. The first bets are expected by Super Bowl LVI, in February 2022.

New York Selects Nine Mobile Sportsbook Operators

Last summer, the New York State Gambling Commission set December 6 as the final date to reveal which sportsbook operators won a coveted slot in the new mobile sports betting industry. Turns out the commission finished evaluations a month early, and on November 8, it named the winners.

Ladies and gentlemen, congratulate Bally Bet, BetMGM, DraftKings, Caesars, PointsBet, Resorts World, Rush Street Interactive, Wynn Interactive and FanDuel.

FanDuel was the primary applicant for Bally Bet, BetMGM and DraftKings. Kambi Group had that honor for the rest of the sportsbooks. Kambi, which provides sports betting technology to sportsbooks, hedged its bet, and also submitted an application coupled with Fanatics and Barstool Sportsbook, according to the Albany Times-Union.

The lucky sportsbooks get to pay $25 million each for a licensing fee and then hand over 51 percent of their gross revenue to the state. Still, the reason the nine operators are jumping for joy over forking out so much money is the pot of gold from more than 15 million people, many of them passionate sports fans.

The state, which dragged its feet to approve mobile sports betting under former Governor Andrew Cuomo, who was cool to the idea until Covid-19 put a dent in the state budget.

All the hoopla surrounding the selections doesn’t mean you should pick up the phone and place a bet in New York. There’s more work to do.

The sportsbooks need to set up servers tied to one of the four commercial casinos in the state. Each sportsbook has to pay the respective casino $5 million a year. The state still must approve technical details and test the mobile apps and the gaming platforms, according to the New York Times.

The state will need to issue ancillary licenses to vendors who provide geolocation services to make sure that revenue from bets placed in New York stays in New York.

It’s all worth it, say the winners.

“New York is a crown jewel market with more than 20 million residents which, upon launch, will become the largest online sports betting market in the United States,” Rush Street Interactive CEO Richard Schwartz said in a press release.

The early announcement means mobile sports betting will almost certainly be ready in time for the Super Bowl, said Becca Giden, director of policy for Eilers and Krejcik Gaming, a research and consulting firm.

Meantime, BetMGM unveiled a multi-year marketing partnership with Madison Square Garden Entertainment, which owns the arena and its chief tenants, the New York Knicks, and the New York Rangers.

New York is a critical state for BetMGM’s continued growth, BetMGM Chief Revenue Officer Matt Prevost said in a statement. “I can’t think of a better way to begin our relationship with The Empire State than partnering with The World’s Most Famous Arena and their legendary team franchises.”

Live game coverage of the Knicks, Rangers, New Jersey Devils and New York Islanders on MSG Networks will feature content from BetMGM.

Soo Kim, chairman of Bally’s Corp.’s board of directors, said, “This license advances our overall market footprint and marks the latest milestone on our journey towards becoming the leading omni-channel gaming provider in the U.S.”

The CEO of Penn National—which was not chosen for a license—told investors the operators won’t make money. “Keep in mind that the 50 percent tax is in addition to a really high license fee. The state’s going to make money,” Jay Snowden said.

Bally’s Corp. CEO, Lee Fenton spoke about the mobile betting in New York in a conference call.

“No one’s happy with a 51 percent tax rate. I think that will be true for all the partners that we’ve been working with as well. But it’s a huge state and therefore the scale of it means you can have opportunities,” he said.

In a statement after Monday’s vote, State Senator Joseph Addabbo Jr., who spearheaded the legislation, told the Associated Press. “I am confident that with the announced, credible winning bids, we have the potential of eclipsing other states in mobile sports betting handle, raise significant revenues and funding for education and youth sports.”

New York hopes to stop the estimated 20 percent of bettors who crossed the Hudson to New Jersey to place bets, according to Forbes.

Not everyone is pleased.

“I’m truly disappointed that the Gaming Commission is making a serious error in not being inclusive, and just going back to the good old boy systems,” Assemblyman Gary Pretlow told the New York Times. Pretlow heads his Committee on Racing and Wagering. “We’re just playing around with the same people.”

Commissioners said the evaluation process considered whether the bidders would pay close attention to “racial, ethnic and gender diversity” in their employees. But more weight was allotted to expertise and experience.

The consortiums received bonus points for working with tribes. The FanDuel group partnered with the Seneca Nation, while the other group struck a relationship with the Oneidas and the Saint Regis Mohawk Tribe.

DraftKings CEO Jason Robins says his company will spend what is needed to market its New York relationship… and worry about profits later, according to SBC Americas.

“I think we feel just like we do in other states. There’s a lot of levers we can pull such as cutting back on the rate of promotion and spending less on external marketing. Those are things I would expect everyone in the industry would do because I don’t think anyone’s going want to run at a long-term unprofitable rate in any state,” said Robins.