News out of New York on Monday evening sent shockwaves through the sports betting community as the country’s three largest sportsbook operators joined forces on a single bid for mobile access to what would be the country’s largest market.
Monday was the deadline for applications for the state’s mobile sports betting licenses, and hours after the 4 pm ET deadline, the New York State Gaming Commission released information on the six proposals it received.
Of those, one that stood out was a proposal submitted by FanDuel. The Gaming Commission’s release noted that FanDuel’s partners on the bid were DraftKings, BetMGM, and Bally Bet.
Market analysis, as well as data available from some states where FanDuel, DraftKings, and BetMGM compete together, show those three as the top operators with an estimated market share exceeding 70 percent. In addition, they’re joined by the digital brand of one of the fastest-growing gaming companies in the US.
In addition, The Athletic reported Monday evening that the Seneca Nation – a sovereign nation based in western New York with a large tribal gaming presence – was also involved in the application as were the ownership groups for the New York Yankees and Buffalo’s major league franchises, the Bills and Sabres.
The state will begin reviewing and scoring applications. Starting next month, the Gaming Commission may invite the six applicants to make an oral presentation. Applications will be reviewed on several technical factors to determine “qualified” applicants. Applicants will also receive bonus points for establishing a partnership with a New York tribal gaming entity.
Kambi Also Makes Big Bids
Under New York’s complex sports betting structure, the application process requested information from entities called platform providers that in turn would offer access to partnering operators. The solicitation called for the state to pick at least two platform providers and a minimum of four operators. In the bid, the platform providers were required to propose the tax rate for the state, with guidelines that made a rate exceeding 50 percent of gross gaming revenue nearly a necessity.
To add even more layers of complexity, the state said it would welcome bids that included multiple platform providers on the same application, and companies were allowed to participate in multiple bids.
That complexity was in full display in the list of applications the Gaming Commission posted.
Kambi, a sports betting technology provider, submitted two of the six applications. In one, it partnered with Penn National Gaming’s interactive division, which operates Barstool Sports, and Fanatics, the online sports retail giant that made news in June when it was reported that former FanDuel CEO Matt King would join the company. Kambi’s other proposal included Caesars Sportsbook, Resorts World casinos, PointsBet, Rush Street Interactive, and WynnBET.
Three other applications did not list any partners. Bet365, which currently operates the retail sportsbook for Resorts World Catskills, applied. As did FOX Bet, a US-based sports betting brand owned by Flutter Entertainment. Flutter, by the way, also owns FanDuel.
The final applicant was Canadian-based theScore Bet, which last week was acquired by Penn National. In the acquisition, Penn executives said they planned to integrate theScore’s technology platform into its operations.
Could FanDuel’s Bid Win Outright?
It’s possible that New York under the right circumstances could select one application as the only winning bid if it included at least two platform providers and four operators.
The request for application document states if a qualified applicant with the highest initial ranking score contains at least two platform providers and four operators, the Gaming Commission will begin reviewing the price proposals (ie, proposed tax rates) for all qualified bidders. If that qualified applicant has the highest total score after considering pricing information, state officials will then review the remaining bids to determine if additional awards are in the best interest of the state.
In essence, the Gaming Commission will determine if additional applicants would help generate more revenue for the state. If so, those applicants would then be recommended for licensure. However, that would also be contingent on those applicants agreeing to the top applicant’s proposed tax rate, if that rate is higher.
The possibility exists that either the FanDuel application or the Kambi-Caesars-Resorts World-PointsBet-Rush Street-WynnBet application could have two or more platform providers. Platform providers can also serve as operators, too. If either does, it could be the sole awardee.
For the FanDuel application, one of its strengths will be the market share its members offer. Last month, Daniel Stone, head of data content for Gaming Compliance, noted FanDuel, DraftKings, and BetMGM were the top three online sports betting operators, garnering more than 80 percent of the market in 10 key states – with FanDuel controlling 50 percent in May.
Not all states report handle broken down by operator, but data from Michigan and Indiana – two of the top seven markets in the US – shows that those three represent approximately 75 percent of the market in those states on a month-to-month basis.
NY Sports Betting Licenses Could Run 10 Years
Under the solicitation’s timetable, applicants are to be considered for licensure are to be identified by Dec. 6. If any pricing proposals need to be revised, those finalists would have a week to either submit new pricing or turn down the offer. Licenses would then be awarded at the next Gaming Commission meeting, to be held on an as-yet-undetermined date.
Based on the applicant’s final tax rate, a license would run for 10 years if that rate is at least 50 percent. Lower tax rates equate to shorter licensing terms. In addition, each platform provider listed on an application would pay a $25 million licensing fee.
As reported previously, the possibility exists that the solicitation could still be canceled before contracts are awarded. The solicitation is based heavily on a plan proposed by Gov. Andrew Cuomo, who faces calls for his resignation or removal after a report found he sexually harassed multiple women, including current and former state employees. State lawmakers had proposed a less complex plan that mirrored how other states implemented sports betting by allowing casinos to partner with online providers.
Cuomo, though, has rebuffed calls to resign, and earlier on Monday, state lawmakers announced that it would be several weeks before potential votes to impeach Cuomo would be held. If impeached, Cuomo would be removed from office temporarily pending a trial among state senators and the court of appeals, but he would also have at least 30 days to prepare for that trial. That means the possibility of his removal from office before contracts could be awarded is less likely at this point.
Cuomo has stated the plan would allow New York to generate $500 million in tax revenue annually within the next couple of years.
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