New York advances in mobile sports betting
New York is opening up its lucrative market for mobile sports betting, but gaming companies vying to operate in the state could have to pay a hefty premium for the privilege.
State officials released a request for nominations from sports betting companies earlier this month, with proposals expected on August 9. DraftKings Inc.
and FanDuel Group, the most dominant companies in the online betting industry, are expected to submit claims to the New York State Gaming Commission in the coming weeks.
DraftKings chief executive Jason Robins told a Goldman Sachs conference in June that the company is “excited and hopeful that we will be able to come up with a very competitive bid and be selected as the l ‘one of the few operators in New York “. FanDuel spokesperson Cory Fox said the company is thrilled to be able to offer its services in New York City and is carefully reading the request for nominations.
The state estimates that mobile betting will ultimately generate $ 482 million in annual tax revenue in a sports betting market of around $ 1 billion. But New York is not making it easy for gambling companies, according to people familiar with the state’s plans. Companies must offer to pay the state at least 50% of their revenues, which some say could reach 60-65% in the competitive process.
New York State Budget Director Robert Mujica, tax adviser to Governor Andrew Cuomo, said the state expects major industry players to apply. âNew York is a huge market,â Mujica said. âOne way or another, the suppliers will participate, so we think they will do their best. “
After several years of deliberation, Cuomo and New York state lawmakers agreed to legalize online sports betting as part of the state budget passed in April. Lawmakers advocated a model, similar to New Jersey, where casinos would join mobile betting companies. A tax rate would have been set by law.
Instead, the state will choose at least two platform providers, which would provide the technology, and four operators, which would offer the brands aimed at consumers. The New York Gaming Commission will score licensees based on the applicant’s background and plans, but also on the tax rate they are willing to pay.
New York officials said they based their plan on the New Hampshire system, where the State Lottery solicited bids and DraftKings launched as the sole mobile operator at the end of 2019. The Lottery of New Hampshire receives 51% of gross mobile sports gaming revenue. paris, after taking into account promotional expenses. The state received $ 13.3 million in mobile sports betting revenue between July 2020 and June this year, according to the lottery.
At a pivotal time for the U.S. gaming industry, the Supreme Court in 2018 paved the way for states beyond Nevada to legalize sports betting. Today, 31 states and the District of Columbia have legalized sports betting, although not all states allow mobile betting.
Daniel Wallach, an attorney who advises gaming companies, said he expected bidders in New York to be able to offer up to 60% of their earnings, after paying the winning bets, to the State.
SHARE YOUR THOUGHTS
What are your prospects for mobile sports betting? Join the conversation below.
âIt would be the highest revenue sharing model for mobile sports betting in the United States,â he said.
Bill Pascrell III, a lobbyist who represents a group seeking a license in New York City, said the state was making a serious mistake in limiting the number of sports betting operators.
âThey’ll learnâ¦ probably about a year after launch, why they want to retool it, and they’ll want to retool it because of what’s going on in New Jersey,â Pascrell said. , whose father is a congressman representing northern New Jersey.
By comparison, in the Garden State there are more entities, each paying much lower tax rates to the state. More than a dozen companies offer digital sports betting with a 13% tax rate, according to the state’s Division of Gaming Enforcement website. Last year, New Jersey players bet $ 5.5 billion on online sports, amid casino closures during the pandemic, and $ 487 million in person. Total sports betting revenue for the year was nearly $ 399 million, up about 33% from the previous year; Online casino revenue was $ 970 million, double the revenue from the previous year.
FanDuel and DraftKings recently made deals with Connecticut’s two tribal casinos to handle online betting. FanDuel has partnered with Mohegan Gaming & Entertainment, owner of the Mohegan Sun Tribal Casino, while DraftKings has partnered with Foxwoods Resort, owned by the Mashantucket Pequot Tribe.
Under an agreement with the tribes, Connecticut set a 13.75% tax rate on sports betting income and an 18% tax rate on the first five years of online casino games. , such as betting on slot machines and roulette games on mobile phones. This tax rate rises to 20% for the next five years. The state’s amended tribal covenants defining gambling agreements have yet to be approved by federal regulators.
Meanwhile, the Connecticut Lottery is looking for its own partner to manage online sports betting for the state. Lottery officials are in contract negotiations with a company after a competitive application process. The lottery has not publicly identified the companies while the selection process is ongoing.
Copyright Â© 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8