New York Wants A Big Slice Of The Mobile Sports Betting Pie

On Friday, the New York State Gaming Commission revealed the details that will begin the request for proposal process that will ultimately lead to mobile sports betting in the Empire State. The NYSGC also included draft regulations with the RFA bid details.

There weren’t many surprises in the 130-page RFA or the 60 pages of proposed regulations. Rather, the NYSGC simply clarified what was already suspected; that doing business in New York will be an expensive proposition.

At the end of the day, the state will select a minimum of two platforms and four mobile sports betting operators.

That said, there will be multiple steps in the process:

• Potential applicants can query the NYSGC until July 16 and receive answers by July 22, followed by another opportunity to submit questions.
• The submission deadline is 4 PM on August 9.
• The Commission will select finalists no later than December 6.
• The Commission will announce the winning proposals and award licenses at a subsequent hearing.

And the Judges’ Scores Are…

The NYSGC will use a point system to determine the winning New York sports betting proposals.

Applicants can receive a maximum “technical factor” score of 75 and must score at least 60 in the following categories to be considered qualified.

• Expertise in the market of the Applicant and the Applicant’s Proposed Operators up to 25 points
• Integrity, sustainability, and safety of the Mobile Sports Wagering Platform up to 20 points
• Past relevant experience of the Applicant and the Applicant’s proposed Operators up to 15 points
• Advertising and promotional plans up to 7.5 points
• Capacity to rapidly and efficiently bring Authorized Sports Bettors into the Applicant’s Platform up to 2.5 points
• Applicant’s efforts to foster racial, ethnic, and gender diversity in Applicant’s workforce and the each of the Applicant’s proposed Operators’ workforce up to 2.5 points
• Other factors impacting revenue to the State up to 2.5 points

Applicants will also receive five bonus points (these bonus points cannot be used to push an applicant over the 60-point floor) if they have a revenue-sharing agreement “related to mobile sports wagering with a Native American tribes or nations that is party to a compact with the State.”

Most importantly, the state will award points based on pricing or how much money it will send to the state.

• 12.5 percent up to 30 percent = 3 Points
• 30 percent up to 40 percent = 10 Points
• 40 percent up to 50 percent = 15 Points
• 50 percent = 20 Points +1 Point for each full percentage over 50 percent

The pricing numbers seem meaningless, as the RFA states, “An Applicant must provide a tax rate that is fifty (50) percent or greater for its Preferred Scenario.” Further, the 50% tax rate is for a 10-year license term, while 30%-50% shrinks the license term to five years, and under 30% provides a three-year license.

According to the RFA:

An Applicant’s final score shall be computed by adding the Technical Factor Score, the Tribe or Nation Bonus (if any) and the Pricing Factor Score. In the event of a tie, the applicant with the higher Pricing Factor Score shall be ranked higher.

Based on the timeline, the New York mobile sports betting launch is likely to drag into 2022. However, whether it’s missed deadlines or pending litigation, that timeline could easily get extended by weeks, months, or even years.

How the Structure Impacts Players

So what does all of this mean for sports bettors in New York?

Not much.

Customers may see fewer promotions (particularly since the proposed regulations state operators cannot deduct promotional spend from revenue) and slightly inferior lines due to the heavy operator burden.

When it comes to choice, New York will be neither good nor bad. The minimum is two platforms and four operators, but the NYSGC can hand out more licenses if it’s in the state’s best interest.

The high cost of doing business will almost certainly favor major operators, which can be good or bad depending on the customer’s perspective of what is important. There is no shortage of major operators in the US sports betting industry. As such, it seems pretty likely the two-platform-four-operator floor will be increased at some point, as the New York opportunity is the best in the nation.

Bottom line: New York sports bettors are likely to have multiple big names to choose from and are unlikely to notice any significant differences between New York and other states.