New York awards sports betting licenses to winning bids

The New York Gaming Commission (NYGC) has issued sports betting licenses to two consortia containing nine of the biggest online gambling companies in the US.

The first bid endorsed by the NYGC will see US market leader FanDuel serve as the primary applicant, alongside Bally Bet, BetMGM, and DraftKings.

The second successful bid came in from primary applicant Kambi and includes sportsbooks belonging to Rush Street Interactive, Caesars, WynnBet, and PointsBet.

Bet365, Penn National Gaming, theScore, and Fox Bet were among those to miss out entirely.

Under rigid criteria set out by the NYGC, operators were assessed based on technical and pricing criteria, with bonus points up for grabs if an operator partnered with a tribal gaming operator in New York.

Each prospective licensee was then given a score based on the proposed measures, with applicants required to obtain a score of at least 60 from a possible 75 in order to qualify.

Global sports merchandiser Fanatics missed out on a license by failing to meet the required score, despite attracting support from Roc Nation founder and international rap star Jay-Z.

Fanatics has made no secret of its desire to branch out into sports betting after registering a new sportsbook trademark with the US Patent & Trademark office, although any expansion must now take place outside of the Empire State.

Bet365 was the only rejected applicant to generate a score necessary to qualify, although NYGC officials were unable to determine whether allowing the online-only bookmaker to operate in New York would directly benefit the state.

Granting bet365 a license would also have seen the state’s gross betting revenue tax drop from 51% to 50%, so its bid was ultimately refused.

DraftKings' statement on New York mobile sports betting and being selected as a sports betting operator pic.twitter.com/5sJFz2h1Xq

— DraftKings News (@DraftKingsNews) November 9, 2021

New York regulations require platform providers to serve as primary applicants, which are then obliged to declare all operators they wish to host on their respective technical platforms.

These suppliers must fully integrate approved operators onto their platforms, while providing and maintaining wagering and submitting records to state regulators.

Winning operators were understandably excited by the opportunity of operating in the New York market, which is the country’s fourth most populated state with 20 million inhabitants.

BetMGM CEO Adam Greenblatt praised the NYGC for operating a “transparent and timely” sports betting licensing process.

“New York has the potential to be one of the largest sports betting markets in the US,” said Greenblatt.

“BetMGM is particularly well-positioned to become a leader in the state given the strength of the M life customer database, close proximity of Empire City Casino to support our omni-channel strategy, and parlaying our already leading positions in nearby states,” he added.

Wynn Interactive CEO Craig Billings highlighted the potential integrations of mobile sports betting into the firm’s land-based portfolio.

He said: “New Yorkers represent a significant portion of the Wynn Las Vegas and Encore Boston Harbor databases, and we look forward to giving those customers more ways to earn and use Wynn Rewards.

“We also look forward to meeting and engaging with new customers in the state via WynnBET,” he added.

Licenses, which cost $25m each, are valid for 10 years.

Operators will pay a tax rate of 51% on gross sports betting revenue, one of the steepest tax rates for betting in the US, with profitability likely to present a serious challenge for successful operators.

To put it into context, operators in Nevada and Iowa pay just 6.75% on gross sports betting revenue. Rhode Island and New Hampshire both have rates of 51%, although these are states with monopoly sports betting operations. Therefore, New York will boast the highest tax rate of multi-operator state in the US.

New York's massive 51% online sports betting tax rate (roughly 5x the national average) will create difficult revenue environment; $PENN CEO (didn't earn license) said sustained profit would be nearly impossible: $DKNG (earned license) says it will require promo, marketing cuts

— Ryan Butler (@ButlerBets) November 8, 2021

The regulation of New York could have knock-on effects for neighboring Connecticut.

A recent report published by geolocation firm GeoComply showed more than 1.2 million sports betting transactions have taken place in Connecticut since the state’s initial soft launch on 12 October.

Much of the state’s early online casino and sports betting activity was located in three areas, Stamford, Bridgeport, and New Haven, all of which are close to the New York border.

The Constitution State plays host to three main licensees in FanDuel, DraftKings, and Rush Street Interactive, all of which were successful in New York and could now benefit from cross-state marketing initiatives. Connecticut sports betting operators pay a much lower tax rate of 13.75%.

How the regulation of sports betting in New York impacts New Jersey will show up in the monthly figures released by the regulator. Eilers & Krejcik Gaming suggested last year that $837m was bet by New Yorkers across the border in 2019.