New York Gov. Andrew Cuomo and state lawmakers announced an agreement Tuesday on how to operate mobile sports betting in the state. The governor got his lottery-style approach, but lawmakers got more skins in the game. And for those that want access to what will be America’s largest sports wagering market, they’ll have to pony up some big bucks.
Under the agreement, the New York State Gaming Commission will release a request-for-proposal (RFP) solicitation no later than July 1 to select two “platform providers” to conduct mobile sports betting in the state. The commission will require those providers to work with a total of no less than four sports betting operators. However, the commission may award more licenses if it deems it in the best interest of the state.
Platform providers will pay an upfront licensing fee of $25 million. They will also pay the in-state casino that will house its server a $5 million annual fee. The providers will also be subject to a tax on gross gaming revenues no lower than 12 percent. The competitive-bid RFP process will help determine the tax rate.
The operators selected also must agree to pay the same tax rate as the platform providers.
In an interview Tuesday with Casino.org, state Sen. Joseph Addabbo, D-Queens, said the state is looking for revenue-sharing agreements where New York gets “upwards” of 50 percent.
Responses to the RFP would be due within 30 days of the date the commission issues the solicitation. The agreement calls for the state to select the platform providers no later than 150 days after it receives the final application, if that’s practical.
That would mean the state would award contracts around the end of the calendar year.
Final Sports Betting Product a “Hybrid Compromise”
Addabbo described the end product as a kind of “hybrid compromise” of the plans the governor and lawmakers were touting.
The senator and Assemblyman Gary Pretlow, D-North Vernon, proposed a model where each casino would receive up to two mobile skins, or partnerships with mobile operators. It was predicated on operators paying a $12 million entry fee and a 12 percent tax on gross revenues.
Cuomo, on the other hand, pushed the state-centric model, which he likened to how the state operates the lottery. He sought to cut out the casino middleman in an attempt to collect as much of the revenue as possible. He envisioned generating as much as $500 million annually.
However, lawmakers and other raised concerns that the lottery-style approach would provide New York bettors with limited options. Their fear was that bettors would either continue going to New Jersey or Pennsylvania or stay in the state and continue using an illegal bookie or offshore app if New York didn’t offer multiple mobile applications.
That led lawmakers and the administration to hammer out a deal that Addabbo said bodes well for the state.
Generally speaking, it’s the governor’s model with roughly 60 percent of our legislative language in there,” he said.
The budget bill does forecast $500 million in annual revenue from mobile sports betting by the end of the third year of operations. In the first year, it anticipates $99 million, followed by $357 million in year two.
Funding will go toward education. However, some money will go toward youth sports in disadvantaged communities as well as problem gaming resources, Addabbo said.
The senator’s hopeful operators will be up and running by the Super Bowl.
“You don’t want to miss that,” he said. “That’s a major business day for mobile sports betting.”
Tribal Casinos Included, But Is It Enough?
In recent days, some central New York lawmakers raised concerns about the plan to legalize mobile sports betting. They feared that if it excluded the Oneida Indian Nation from the process. If that happened it would potentially jeopardize millions in revenue for the state and communities surrounding the nation’s casino.
They also said it could potentially keep residents in a 10-county area from being able to place bets on apps within their communities because of the Oneida’s exclusive rights granted in the gaming compact.
The agreement now gives the state Gaming Commission the authority to award additional points for an aspiring platform operator’s proposal if it enters into a revenue-sharing agreement with a tribal gaming authority.
However, Tom Precious of the Buffalo News tweeted Tuesday night a statement from Oneida officials that said they were disappointed and called the agreement a step in the wrong direction.
“The Nation had worked hard with multiple parties to negotiate a compromise that worked for everyone and was approved by the Assembly and Senate and endorsed by all of the tribal and commercial casinos,” the Oneida said. “It is unfortunate that the state has chosen instead to take such an unbalanced approach that will unnecessarily hurt our region.”
Still, tribal leaders said they remain willing to find a viable solution with the state.
Breaking the Routine Needed in New York
With the RFP not even ready to roll out for about 85 days, it’s too early to determine who the bill benefits or hinders, but it seems like a company that provides a sports betting platform to multiple sportsbooks, such as Kambi, or a company with several sportsbooks within its organization, like Flutter Entertainment, could have a potential advantage.
Currently, bettors can make sports wagers in New York at both the state’s commercially licensed and Class III tribal casinos. Operators with a presence include Bet365, BetRivers, Caesars, DraftKings, Fan Duel, Kambi, and the Stars Group.
The licensing fees and likely tax rate will present high barriers of entry into the state’s market. Still, New York should command plenty of attention of sportsbook operators. When it goes online, it’ll become the largest state by far to offer mobile wagering. New York’s 19.5 million population is about 7 million more than either Pennsylvania or Illinois.
“We want to thank the legislature and Gov. Cuomo for the progress made in bringing legal, regulated, mobile sports betting to New York,” said Griffin Finan, vice president of government affairs and associate general counsel for DraftKings, in a statement to Casino.org. “We look forward to learning more as the process continues to unfold.”
The state Senate went well into the early hours of Wednesday to pass the S.2509-C, the bill with the gaming language. It passed by a 38-25 vote. It still must clear the Assembly before Cuomo can sign it into law.
With millions of dollars flowing into New Jersey and illegal markets, Addabbo said New York bettors that use those services have more than likely already established a routine. The challenge will be in urging them to break that and form a new one that will benefit their home state.
“To get them to change that rhythm, to do something different and try something new, only will depend on how good our product is,” Addabbo told Casino.org. “So, it’s not a wait-and-see, but in the end when all the dust has settled on the mobile sports betting product, hopefully, it is a good enough product for New Yorkers to use.”
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