NYSGC Encourages Online Betting Applicants To Include Tribes And High Tax Rates

Posted By Martin Harris on July 23, 2021

Earlier this month, the New York State Gaming Commision (NYSGC) at last released the request for applications (RFA) for online sports betting. Now prospective providers and operators have until Aug. 9 to submit their bids to be among the select few chosen to provide online sports betting in New York when it finally launches, perhaps in time for the next Super Bowl in February.

To help with the application process, on Thursday the NYSGC released another appendix to the RFA, a new Q&A list providing clarity on requirements, judging criteria, and other matters.

Tribal consideration will earn sportsbooks points

Many of the items addressed in the new Q&A have been covered before by the NYSGC. However, others do include additional information. The Commission clearly wishes for all parties to be reasonably informed about both the application process and what will happen when the Commission sits down to select at least two platform providers and four mobile sports wagering operators.

One such clarification finds the NYSGC confirming that a platform provider can join multiple bids. If a provider does so, the Commission will score each bid independently. Also, the platform provider will have to pay the $25 million licensing fee for each selected application.

The Commission will award points to applicants adding up to a maximum score of 75 points. Applicants must earn a minimum of 60 points to remain under consideration. As far as scoring applications go, the NYSGC also provides more details regarding its evaluation criteria.

For instance, applicants with sports revenue-sharing agreements with New York tribes earn a bonus. That said, agreements with multiple tribes don’t earn multiple bonuses. Rather, the Commission will award up to 5 points total with the amount determined by the overall value of the agreement(s) the provider has established.

Relatedly, the Q&A clarifies that whatever the tribal agreements are, no servers will be located on tribal lands.

Having a minority business partner also earns applicants up to 2.5 points. There again, the NYSGC will determine the score by judging the value of the partnership.

More points for higher sports betting tax rates

The point system earns additional discussion in the new Q&A, such as when clarifying the awarding of points for applicants’ proposed taxation rate on mobile sports wagering gross gaming revenue.

The higher the tax rate, the more points applicants will receive according to the following system:

  • 12.5% to 30% = up to 3 points
  • 30% to 40% = up to 10 points
  • 40% to 50%t = up to 15 points
  • 50% = up to 20 points (with additional points for more than 50%)

The Commission will employ a sliding scale. That means a tax rate of 49% (for instance) would receive more points than one of 42%. Also, the NYSGC clarifies that an applicant proposing a tax rate at one of the “transition points” between levels (e.g., 30, 40, or 50 percent) would receive the lower point value. For example, a 40% rate would receive 10 points.

Under this heading, the NYSGC also addresses how it will handle bids describing scenarios in which the tax rate will decrease if the NYSGC chooses more than the preferred number of providers and operators. In that case, “each applicable scenario will be scored separately based on the Pricing Matrix submitted by the Applicant.”

Other questions answered regarding application logistics

The Q&A covers additional logistical questions regarding applications as well.

Applications can contain multiple platform providers, in which case they must designate one provider as the primary applicant. However, the NYSGC will not favor primary applicants or judge them differently than non-primary ones.

Applicants on multiple bids can be a platform provider on one bid and an operator on another. The Commission also notes it has yet to establish a renewal process for when the 10-year license terms expire.

Also, as covered before, the NYSGC expects platform providers and operators to maintain the same partnerships they have during the application process throughout the 10 years of their license, if awarded. However, “the Commission will consider changes that will in their subjective determination generate as much or more revenue for the State.”

As noted, applicants have a little over two weeks left to get their bids into the NYSGC. Once they do, the Commission will then have up to 150 days to evaluate the applications and make their selections.

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