Former New York Governor Andrew Cuomo didn’t mind gamblers in the state betting on the Buffalo Bills at a casino sportsbook. But he didn’t want them betting on the team to win from their smart phones.
The Covid-19 pandemic forced his hand and reluctantly, he gave in.
Now Cuomo is gone, and mobile betting is inching closer to reality. On October 19, regulators approved a final tax rate for potential licensees.
The New York State Gaming Commission did not release the rate to the public. The highest tax rate submitted by any of the bidders becomes the tax rate that all licensees must pay, according to Legal Sports Report. Tom Precious of the Buffalo News was first to tweet the report. Bidders were required to amend their proposals by October 25 to account for the tax rate. The original request for proposals assumed the tax rate would be 50 percent at the minimum, but bidders get bonus points for proposing a higher tax rate, so some experts have speculated the tax rate could be as high as 64 percent.
The commission doesn’t have to award the licenses until early December, but could do so earlier with the tax rate decided. Agreeing to match the winning tax rate does not guarantee that a bidder will receive a license, but failing to match is results in immediate disqualification.
To date, the agency has accepted six bids for online licenses, three group consortium bids and three from single companies. At least four operators will be selected as well as two platform providers who supply the technology.
Here’s a breakdown:
- Bet365 seeks to become operator and provider with no other companies.
- Kambi, Fanatics Sportsbook, and Barstool Sportsbook, with Kambi as the provider. The bidder projects incremental revenue of $1 billion to New York over a 10-year period.
- FanDuel, DraftKings, BetMGM, and Bally Bet, all listed as operators and providers. The group predicted more than $1.3 billion in tax revenue by year three alone. The group claims a combined market share of 78 percent of the online sports betting universe in the U.S.
- FOX Bet lists itself as operator and provider.
- Kambi has a second bid in partnership with Caesars, Rush Street Interactive, Resorts World, Wynn Interactive and PointsBet. They assumed a 51 percent tax rate which projects to revenues of $808 million a year for the state. This rises to almost $900 million a year with nine operators. “The data shows that there are diminishing returns once enough operators with the financial resources and customer bases are included. For example, in New Jersey, the top nine operators generated 98.9 percent of the mobile wagering revenue,” the group wrote.
- theScore also lists itself as provider and operator. Penn National Gaming recently acquired the company.
Research included in the FanDuel-led bid found more than four sportsbooks taxed at 50 percent would be unsustainable. The Kambi-led bid that includes Caesars Sportsbook, meanwhile, said up to nine sportsbooks could survive when taxed at 51 percent.
State Senator Joe Addabbo, who has pushed for this for so long, has an optimistic outlook on when the first bets could be made.
“I’ll stick with the aggressive optimism that we’re going to do this hopefully by the beginning of the year and certainly by the Super Bowl.”
If New Yorkers are not buying what’s offered, the lawmakers need to be ready to change things.
“We’ve got to be ready as a legislature to do what we have to do to make this a better product, if need be,” Addabbo said.
Meanwhile, Assemblyman Gary Pretlow, long an advocate of gaming in New York state, wants all the applicants to be licensed at a 12 percent tax rate. It’s an opportunity, he said, to “get this right.”
Also last week the gaming commission opened up bidding for three casinos in the “southern tier” of the state— New York City, Nassau or Suffolk counties on Long Island or Westchester, Rockland and Putnam counties. Observers expect that Resorts World New York City at Aqueduct racetrack and MGM’s Empire Casino at Yonkers Raceway will win two of the bids. The third will be a contest between Las Vegas Sands, Wynn Resorts and Bally’s. The commission estimates that the three casinos would produce between $420 million and $650 million annually in gaming taxes.
