Bet Bids From FanDuel, DraftKings And Many Other Usual Suspects Win Approval

Nine operators are authorized for chance to get up and running by Super Bowl
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Earlier this year New York Gov. Andrew Cuomo was pushing for the state’s lottery to run online sports betting operations, which would have left consumers with no legal competing lines to seek out.

That is, unless they were inclined to cross over to neighboring New Jersey (as they had since 2018) or Connecticut (since last month’s launch of mobile sports betting there).

But Cuomo has since resigned, and his brief flirtation with a monopoly yielded to New York Gaming Commission approval Monday of nine operators to kick off wagering in the Empire State — potentially within a few months.

The top-scoring application was a Kambi-led bid that includes familiar partners PointsBet, Caesars, WynnBet, Resorts World, and Rush Street Interactive (which operates in different states as PlaySugarHouse or BetRivers).

Minutes after announcement of that award, the commission approved a second, FanDuel-led “super bid” that also included DraftKings, BetMGM, and Bally’s. Under a matrix tied to the number of operators in the state, that reduced the potential tax rate on operators from 64% to 51% — still the highest in the U.S.

Of four remaining bids to win approval for New York’s mobile sports betting, only one other met the commission’s standard for consideration. But adding that bid would only have reduced the tax rate by 1 point, and a commission member said that the board deemed that as not growing overall tax revenue for New York.

The biggest loser

That rejected bidder was Bet365, so New Yorkers who use that popular brand as one of their favorites while in New Jersey would still have to cross the Hudson River as before. Industry estimates suggest about 20% of the $1 billion wagered in New Jersey in September would have come from New Yorkers. If those gamblers stick to the big brands for their line shopping, they might want to skip that bike ride across the George Washington Bridge or that PATH train to Jersey City or Hoboken.

 

Who else licensed in New Jersey did not gain access to the much larger New York betting market?

Barstool/Penn National, theScore, Tipico, Unibet, BetAmerica, 888, and newcomers Superbook and PlayUp are live in New Jersey, but, for now, will not be in New York. It’s possible that New Yorkers who have grown comfortable with those mega-brands and their “Jersey odds” might still prefer those rather than opt to stay close to home.

New Jersey only taxes gross sports betting revenue at a rate of 13%, or just about one-quarter of what operators will pay in New York.

When Pennsylvania launched sports betting in 2018 with a 36% tax rate, there were worries it would produce less consumer-friendly betting lines, given the much lower profit margin. That prediction did not come to pass. Instead, operators there might offer fewer promotions or “odds boosts” compared to New Jersey — not enough of a difference to convince a casual Pennsylvania bettor to make a trip east across the state line.

Still, 51% is yet another level higher, so it’s not yet clear if operators approved in both New York and New Jersey will offer the same lines.

The licenses — and, at least so far, the tax rate — have terms of 10 years.

What’s the New York timeline?

“New York has the potential to be one of the largest sports betting markets in the U.S., and BetMGM is particularly well positioned to become a leader in the state — given the strength of the M life customer database, close proximity of Empire City Casino [at Yonkers Raceway] to support our omni-channel strategy, and parlaying our already leading positions in nearby states,” BetMGM CEO Adam Greenblatt said in a statement after the commission decided.

Sports betting legalization backers in New York such as state Sen. Joseph Addabbo Jr. have set the February 2022 Super Bowl as a target for sports betting app launches.

But the gaming commission in recent years has been known to be deliberative in its ways. So is the surprising speed with which the bidding timetable concluded Monday a sign that the betting is just a couple of months away?

Some might find it hard to be confident about that, given the commission’s inauspicious remote public hearing that wound up starting 52 minutes late Monday afternoon. For more than 15 minutes, callers to the public hearing were greeted with all sorts of random noise. Then numerous callers were cut off and not allowed back into the call.

After a half hour, the commission announced on social media a phone number to call. But another 20 minutes went by with no apparent progress. Finally, the call started — along with increasingly persistent pleas by commissioners for colleagues to mute their phones.

Vote discussion and the vote itself proceeded rather quickly afterward.

Photo: Shutterstock

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