The New York State Gaming Commission has promised transparency in its process to select applicants for the coveted online sports betting licenses.
But when asked for an update following Monday’s tax rate compliance deadline, the NYSGC offered only a no-comment comment.
“We have no comment on the continuing mobile sports wagering evaluation process other than to reinforce that the RFA timeline has been maintained and the process remains on the published schedule,” a spokesman said.
That leaves it up to PlayNY to try to answer some of the outstanding questions about online sports betting in New York.
Who is the 64% mystery bidder?
While there’s nothing definitive on this topic, several industry insiders speculate that the Big Four — DraftKings, FanDuel, BetMGM, and Bally’s — was the high bidder.
Remember, as part of its redacted bid, the supergroup wanted to be the only four operators selected by the NYSGC, with each willing to pay $25 million up front for that right.
These four operators account for about 80% of the total US sports betting market share in 2021, meaning they could conceivably absorb the massive tax hit. They also projected $1.3 billion in gross revenue by Year 3 in New York, which would mean more than $600 million for the state at a 50% tax rate.
Look, maybe it was someone else. It’s just that this speculation seems to check out.
The Big Four is almost certainly going to be a winner in New York. But it’ll probably have some company.
Did the Kambi Super Bid give us a clue?
Going in, there were two favorites in this process — the Big Four and the Kambi Super Bid.
Among all redacted bids, the Kambi package presented the highest tax rate (51%) with up to nine sportsbook providers. This, to some, reads like the Big Four in addition to Caesars, PointsBet, Resorts World, Rush Street, and WynnBet.
“If our consortium is the only one selected by the Commission, we are best positioned to maximize the overall benefit for the State with the lowest risk,” the bid reads. “If the Commission desires to have a more robust market, our application provides the flexibility for the Commission to add other consortia. We recognize, based on analysis of other states, that more operators tend to create more revenue.”
Selecting this 9×51 structure could leave one compelling player out of the mix, though.
Is Fanatics going to be left on the outside looking in?
Fanatics Sportsbook may have a registration on file at the trademark office, but it is still just a name until something changes. The company still doesn’t have an operational solution.
Fanatics does have a lot of things working in its favor, of course: deep pockets; proven leadership in the sports betting industry; a massive customer database; and a CEO in Michael Rubin who wants to create the sports fan version of Amazon. But it will still be a newcomer to the industry.
Granted, there is a possibility that Fanatics could find its way into New York even if this bidding process doesn’t deliver. The company has reportedly been in talks with both PointsBet and Rush Street about the possibility of a merger or acquisition.
If the favored bids get accepted, that could mean Fanatics eventually ends up in the Empire State anyway, with vice chairman Jay-Z as its front man.
Why not just let everyone into NY sports betting?
That’s what Assemblyman Gary Pretlow wanted. But Pretlow’s last-ditch effort didn’t find any traction.
“The legislature passed a law that required the Gaming Commission to undertake a competitive process, and that is exactly what they are doing,” a spokesman for Gov. Hochul told PlayNY. “In addition, the Hochul Administration will not interfere in any way with the competitive bid process.”
Former Gov. Cuomo wanted a tax rate of 50%. And his budget director, Robert Mujica, is still calling the shots.
So no, it’s probably not going to be the 35% tax rate with everyone involved. And it’s not going to be the New Jersey model (13%) preferred by lawmakers either.
How big could sports betting be in NY?
In a word: Massive. But given how long it took to get to this point, it’s going to be an uphill climb to the top.
“New York is definitely going to have some bumps in the road early on,” one industry source said. “But if they aren’t number one by the end of next year, I’d be stunned.”
Maybe No. 1 in 12 months is ambitious given NJ’s success and its $1 billion September. But with a massive population and fan base, the potential is certainly there.
The NYSGC must select applicants for licenses before Dec. 6. The hope is that the first bet can be placed sometime during the NFL playoffs in January, with NY online sports betting fully up and running by Super Bowl LVI.
Lead photo: smrm1977 | Dreamstime