(The Center Square) – The New York State Gaming Commission is scheduled to meet Monday afternoon and the much-anticipated mobile sports betting licenses are expected to be awarded.
The agenda for the 1:30 p.m. committee meeting includes consideration of the clearance recommendations. It will also include the review of mobile sports betting regulations.
The meeting folder on the commission’s website does not include a list of recommended licensees. However, The New York Post reported earlier this week that at least two auction groups totaling nine operators would be selected.
According to the article, the likely winners are FanDuel, Bally Bet, BetMGM and DraftKings. These four companies bid as a group. Another group led by Kambi Group and comprising Rush Street Interactive, Caesars Entertainment, WynnBet, PointsBet and Resorts World is also likely to be recommended.
If these two groups, which combine to offer eight platform providers and nine sports betting operators (some entities will fulfill both roles), are the sole beneficiaries, then the tax rate on gross sports betting income will be 51 %.
The high tax rate is the brainchild of former Governor Andrew Cuomo.
State lawmakers had proposed a more traditional licensing process involving casino partnerships with sports betting operators. However, Cuomo came up with another proposal that he said would generate more revenue for the state.
He pitched the idea as the state faced a multibillion dollar shortfall from the COVID-19 pandemic.
Under its proposal, which it negotiated in the state budget passed in April, the gaming commission would award licenses through a competitive bidding process.
The NYSGC issued a call for tenders in July and received offers in early August. The bidders were responsible for proposing the tax rate. And the tender scoring system favored bidders willing to share at least 50 percent of the revenue with the state.
On a conference call Friday morning to discuss the company’s third-quarter results, DraftKings CEO Jason Robins did not confirm the Post’s report, saying only that he hoped the report was true.
While Penn National Gaming President and CEO Jay Snowden told financial analysts Thursday that he didn’t think sports betting would be profitable in New York City, Robins said he believed the opposite.
“There are a lot of levers we can pull, like lowering the promotion rate and spending less on external marketing,” Robins told analysts on Friday. “These are things I would expect everyone in the industry to do because I don’t think anyone is going to want to operate at a long-term unprofitable rate in any state. Certainly, from the start, we will approach it as we do in other states where we will invest and seek this path of profitability over two to three years. “
In addition to the high tax rate, each winning platform provider will pay a fee of $ 25 million for the license. According to The Post’s report, this will generate at least $ 200 million in costs on its own.
In exchange for the 51% rate, the state would guarantee the license for 10 years.
Penn National’s Barstool Sportsbook was a bidding partner with online retailer Fanatics in a second offering from Kambi. Other contributors included Bet365, FOX Bet and theScore Bet.
Two weeks ago, the gaming commission sent bidders the final tax matrix and told applicants if they disagreed with the tax structure, then their bid would be disqualified. They gave them a week to consider the offer.
Accepting the tax rate, however, does not guarantee a license. The evaluators noted the proposals to identify the winning bid, then conducted market analysis to determine if more licensing offers were in the state’s interest.
The tax rate fell as the state extended more licenses. In addition, the state reduced the duration of the license if the tax rate fell below 50%. However, the fee would remain at $ 25 million.
If the Gaming Commission licenses and approves the regulations, sports betting supporters hope operators can launch in the state by the Super Bowl.
With a population of nearly 20 million, New York would be the second state in terms of population to launch mobile sports betting. Florida has become the largest state to date with the soft launch of the Hard Rock mobile bookie, which is owned by the Seminole tribe of Florida, on Monday – though that rollout faces a legal challenge.
Experts believe New York, however, would quickly become the number one legal sports betting market in the United States once mobile apps were launched there.
State officials hope to generate up to $ 500 million in revenue per year from sports betting.