Providing some clarification

The New York Gaming Commission (NYGC) has provided some clarity on what online sports betting will look like in the state. It published a ten-page document on Friday in response to 92 questions from parties that have an interest in the sector. The NYGC will be in charge of choosing those entities that get licenses when it comes time.

The successful applicants will ultimately be those that get the best scores.

As part of the legalization plan, commercial casinos will have to host servers for platform providers. The four currently eligible casinos are in upstate New York and each already has a partnership with a sportsbook operator. These existing relationships, however, will have no bearing on the NYGC’s application process. The successful applicants will ultimately be those that get the best scores. Platform providers will have to pay a one-time license fee of $25m and operators will not be subject to a license fee.

In return for making themselves available to host the servers, the casinos will each get a $5m annual fee from the platform providers. Each casino will receive this annual fee no matter if they actually end up hosting the servers or not. Platform providers will also need to pay the casino for any other reasonable and actual costs associated with hosting the servers.

As a consideration to the tribes in the state, platform providers that have a revenue sharing arrangement with tribes will get extra points in the application process. The NYGC has not yet revealed the scoring criteria specifics.

Key decisions ahead

After receiving submissions from applicants, the NYGC will then decide how many licenses it will ultimately hand out. The state is planning to give licenses to at least two platform providers and a minimum of four operators. Platforms providers are also able to be operators.

The decision of which applicants will get a license will depend on what is best for maximizing revenue for the state. It does not appear that the NYGC will issue any further licenses after the closing of the initial licensing process.

The tax rate on the platform providers has not been set as of yet, but it appears that operators will not be able to deduct promotional spend from gross gaming revenue before paying tax. According to the NYGC document, the tax rate will “be determined by the highest rate bid by an Applicant based on the rate provided for the number of providers awarded.”

Rollout on the horizon

Lawmakers in New York gave the green light to mobile sports betting earlier in April through the annual budget. Governor Andrew Cuomo believes that a mature online sports betting market in New York could generate as much as $500m in annual revenue. The state will hold a competitive request-for-applications process before deciding which operators get a license.

This application process needs to begin by July 1. The NYGC is trying to do all it can to speed up the process but it has not provided a specific timeline. Interested parties will have to submit applications within a 30-day deadline. The NYGC then will take no more than 150 days to decide which operators get a license.

The NYGC is in charge of creating the regulatory framework for a mobile sports betting market. It plans to release the first draft of these regulations by the beginning of the licensing application process. Senator Joseph Addabbo has been a long-time proponent for the state legalizing mobile sports betting and he hopes that sportsbooks will be open for business in time for the Super Bowl in February 2022.