The application process for New York online sports betting licenses is heating up as interested parties flooded the New York Gaming Commission with questions about their potential bid packages.
The Gaming Commission published answers to the first round of questions from interested applicants to clear up common questions about what needs to be included in bid packages for online sports betting licenses.
A second round of answers will be published before the Aug. 9 deadline for applicants to submit bid packages.
Applicants will submit bid packages and each package will be awarded points by the gaming commission. Each bid package must include at least two proposed platform operators to be the front end of the online sports betting program.
New York Online Sports Betting Tax-Rate Collusion
One of the most important pieces of each bid package will be the primary applicant’s proposed tax rate. An applicant proposed a question to the state in regards to guidance for non-collusive tax rate bidding.
Q: Can the Commission provide guidance on non-collusive bidding?
A: The purpose of the non-collusive bidding prohibition is to prevent tax rate collusion among applicants. The RFA process is intended to foster a competitive process among parties seeking to operate Mobile Sports Wagering for the benefit of New York State. Collusion among potential bidders concerning a submitted tax rate would be contrary to State interests, hence its prohibition. For clarity, the noncollusive prohibitions are to prevent Applicant-to-Applicant collusion, not to prohibit discussion of tax rates among Platform Providers and Operators within a single application.
It’s been discussed as a big “what if” during the process if applicants would agree on a tax rate threshold they wouldn’t cross before submitting bids in order to keep the rate down. Estimates have shown that the accepted New York online sports betting tax rate will likely be well over 50%. The gaming commission will actively monitor bids for potential for tax-rate collusion.
Platform Providers in Multiple Bid Packages?
Platform providers can be included in multiple bid packages and can be included in more than one selected package by the commission. If they are in multiple selected bid packages, the provider will be required to pay the $25 million application fee for each one.
However, platform operators will only be able to be included in one selected application, not multiple applications.
If an Operator is included within a Selected Application, the Operator will be assigned to the highest scoring Application containing that Operator. All other Applications containing that Operator will be rescored removing that Operator for the purpose of making additional selections. An Operator will be licensed in connection with only one Platform Provider.
Additionally, the gaming commission noted that platform providers will not be able to increase the number of operators at a later date.
Native American Tribe Agreements
The question of Tribal sports betting exclusivity was posed to the gaming commission. The gaming commission noted that Tribes do not have to waive exclusivity to participate in the online sports betting program.
There is no need for a Nation or Tribe to waive exclusivity. State law specifies that the wager occurs where the server is located. No servers will be located on Indian lands. Therefore, by operation of law, no wagering activity will take place on Indian land or within any exclusivity zone.
It’s a key difference between state and federal law. New York’s state law declares a bet is made where the server is located. Florida, on the other hand, is trying to argue the same thing with it’s approved gaming compact at the federal level, which many believe will be denied by the U.S. Department of the Interior.
The commission also clarified the bonus point section for partnerships with New York Tribes. The commission stated that up to 5 points will be awarded based on the number of Nations or Tribes with whom agreements have been executed and the perceived value of the agreements as they benefit the Nations or Tribes.
Additional New York Online Sports Betting Answers
Several other answers were provided during the first round of questions:
- If an operator’s conduct leads to a regulatory breach, or if an operator breaches any obligations specified as responsibilities in bid package, would it affect the platform operator? The commission noted this possibility would be dealt with on a case-by-case basis.
- Each platform provider included in a successful application will be responsible for the operation and maintenance of a platform for the operator to accept and process online sports bets.
- The commission clarified its point valuation for proposed taxation rate on online sports betting gross gaming revenue. 12.5% to 30% will be awarded up to 3 points, 30% to 40% will be awarded up to 10 points, 40% to 50% will be awarded up to 15 points and 50% will be awarded up to 20 points. Each full percent point over 50% will be awarded one additional point.
