New York State Sports Betting Applications Received: Superbids to Win the State?
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On Monday night, New York officials released a document involving their received bids. New York legislators approved mobile sports betting in April 2021 and are hopeful for a potential launch in early 2022, ideally before the Super Bowl. New York will award bids to two different licensed “platform providers” with a minimum of four and a maximum of nine customer-facing brands or “skins.”
The nation’s top sportsbooks have teamed together for one of the coveted New York sports betting licenses in “superbids,” unlike what we have seen in other markets. New York has over 19 million people, making it the fourth-biggest state in the US, so this emerging market will provide a lot of value to sports betting operators.
Superbids
New York received several bids on Monday for sports betting licenses in the state. The first “superbid” involves FanDuel, DraftKings, BetMGM, and Bally Bet, and is likely the odds-on favorite as it involves three of the market leaders in the industry. In addition to the powerhouses of FanDuel, DraftKings, and BetMGM, Bally Bet is a rapidly expanding brand with retail and online sports betting and many regional sports TV networks. This bid also includes partnerships with the New York Yankees, Buffalo Bills, Buffalo Sabres, NYCFC, and YES Network, providing more value to New York.
Kambi is also leading two different “superbids,” each of which offers New York the opportunity to leverage some high-value brands. The first involves the new Caesars Sportsbook in partnership with William Hill and Resorts World, PointsBet, BetRivers, and WynnBet. Caesars has spent over $1 billion on player acquisition and is one of three sportsbooks along with FanDuel and DraftKings to have a partnership with the NFL. Caesars also has partnerships with Turning Stone Resort and Oneida Nation, and those tribal partnerships give it extra points in the bid selection process.
Kambi is also leading a bid with Penn National Gaming and Fanatics Sportsbook. Penn National has a large stake in Barstool and has helped it launch the Barstool Sportsbook. In addition, Penn National acquired theScore last week, which will give it another “skin” and help it gain more market share in Canada. Fanatics, a sports merchandise company, hopes to launch its own sportsbook as early as next year as the company hired former FanDuel CEO Matt King to lead its sports betting offerings.
Single Bids
In addition to the exciting “superbids” formed by some of the largest sports betting brands in the country, New York also received a handful of solo bids from bet365, FOX Bet, and theScore Bet. It’s unlikely these single bids can compete with the powerhouse parties in the “superbids.” however, it is unclear whether or not theScore Bet will maintain its solo bet as it is now a part of Penn National Gaming.
Bid Scoring
The New York State Gaming Committee will award each bid package points based on a number of factors. The NYSGC has listed a number of technical factors along with a set amount of points to be awarded for each factor. The total sum of points that bidders can earn for technical factors is 75 points. In order to be considered a Qualified Applicant, bidders must have at least 60 points from the following factors:
- Expertise in the market: 25 points
- Integrity, sustainability, and safety: 20 points
- Past relevant experience: 15 points
- Advertising and promotional plans: 7.5 points
- Capacity to rapidly and efficiently bring authorized bettors into the program: 2.5 points
- Efforts to foster racial, ethnic, and gender diversity: 2.5 points
- Other factors impacting revenue to the state: 2.5 points
An additional 5 points will be awarded to applicants with an agreement that provides revenue sharing related to sports betting with a Native American tribe or nation.
A bulk of the bid scoring process will depend on the proposed tax rate on mobile sports betting gross gaming revenue (GGR). At a minimum, bidders must provide 50% of sports betting GGR to state taxes – this will be the highest rate in the country. The following is the breakdown of how many points can be earned per pricing bracket:
- 12.5-30%: 3 points
- 30-40%: 10 points
- 40-50%: 15 points
- 50%: 20 points
- Additional point for every % over 50%
Next Steps
The NYSGC has received applications from potential platform providers; it will begin a lengthy review process to determine the winning bids. New York State law requires at least four customer-facing brands or “skins” between the two winning platform providers.
The request for application (RFA) put out by the NYSGC earlier this summer requires all bidders to guarantee at least 50% tax on GGR, the highest rate of any state in the country. Winners do not need to be selected until December 6 per the RFA and with a target launch ahead of Super Bowl LVI in February 2022, a decision is expected to be made by the end of 2021.
New York Governor Andrew Cuomo pushed for this bid model despite New York lawmakers’ objections for a more open structure. He posited that this model would provide the state with the most annual taxes – an estimated $500 million. Cuomo is currently facing multiple sexual harassment cases and could be forced to resign, but this bid process is unlikely to be affected by that ongoing scandal.
New York currently has retail sportsbooks at upstate commercial and tribal casinos. Still, the prospect of the addition of mobile sports betting should have sports fans, legislators, and governance alike very excited. Online sports betting is expected to make up at least 90% of the betting handle in the state of New York and will provide the state with a massive amount of tax revenue to be used in a variety of programs.
