The New York committee to award online sports betting licenses in the state has taken a big step forward on Tuesday by determining a “final tax rate matrix” that all bidders will have to meet to be considered in the competition.
The final tax rate has not yet been released to the public, although it has been confirmed to Elite Sports by a representative from the New York Gaming Commission. Bidding groups have been alerted of the rate and will have until 5 p.m., Monday, Oct. 25, to amend their bids if their proposed tax rates are not as high as required.
In its request for proposals for the sports betting licenses, New York’s Gaming Commission noted that it was aiming for a tax rate of at least 50%. The newly introduced final tax rate is expected to be higher than that.
The 50%+ rate would be the highest rate in the country for sports betting. New Hampshire currently taxes revenues at 51%, while Pennsylvania taxes at 36%. In comparison, a state like Indiana taxes sportsbook revenues at 9.5%, while New Jersey taxes online sports betting revenue at 13%.
The 50% tax threshold has been a key point for Gov. Andrew Cuomo, who until just months ago had not been a proponent of offering mobile gaming in the state. However, after the COVID-19 pandemic threatened the state’s finances, he sought new sources of revenue.
If a bidding group chooses not to amend its tax rate to reach the one set by the state, the group will be disqualified from further consideration for a license. However, agreeing to the newly introduced tax rate does not mean the automatic reception of an online sports betting license.
During the RFP, it was announced that proposals will be scored on several factors, including experience in sports betting as well as the operator partners’ experience. Applicants will also receive bonus points if they have a revenue-sharing agreement with a tribal gaming operator in the state.
Providers will have to pay a $25 million license fee, according to the application posted on the commission’s website in July. Applicants will be rewarded with a 10-year license.
After reviews and oral presentations, the Gaming Commission plans to select finalists by December 6 and give those applicants a week to submit a final application. Awards would then be made at the commission’s following meeting.
The New York State Gaming Commission has received six bids, three from solo companies and three group bids. The commission must select at least two platform providers, which will be in charge of the technology the online sports betting program will use, and four platform operators from the submitted bids.
One of the group bids includes market leaders FanDuel, DraftKings, BetMGM and Bally Bet, which combined make up the majority of the U.S. sports betting segment. A second bid also brings together a number of national brands: Caesars, Resorts World, PointsBet, BetRivers and WynnBet.
Barstool Sportsbook (Penn National Gaming) and Fanatics Sportsbook, two companies that have been expanding their presence in the market as of late, are also competing as a conjoined bid. The solo bids include European gaming company bet365, the Canadian sportsbook theScore (recently acquired by Penn National), and FOX Bet.
A January study published by Spectrum Gaming Group for the Commission estimated that New York’s digital market could generate up to $856 million in gross revenue for operators. Cuomo said the state estimated $49 million in tax revenue in fiscal year 2022 and $357 million the following year. A mature market, he said, could generate $500 million to the state.