Assemblyman J. Gary Pretlow (D-89) turned to social media today and called for the licensure of all companies that applied for a New York online sports betting license.
Pretlow, who has long been a proponent of online sports betting in New York, took to his Twitter account this afternoon and called for the state to license all of the companies who applied for a license.
More Competition, Better Sports Betting Product for New Yorkers
Licensing all the companies, he noted, would lead to higher market competition and a better product for New York sports bettors.
A request for comment has been sent to Assemblyman Pretlow and Elite Sports New York is awaiting a response.
New York received bids from a large number of well-qualified companies, and I think it would be a mistake for us to limit the market to a few participants when we have the opportunity to have so many companies competing to provide New Yorkers with the best experience.
— J Gary Pretlow (@JGPretlow) October 21, 2021
Licensing all of the companies that applied will achieve the Legislature's original vision for the sports betting market, and is explicitly envisioned and allowed under the law that was enacted.
— J Gary Pretlow (@JGPretlow) October 21, 2021
I worked to include a sports betting framework in the original casino law, and I have always thought that NY should have a well-regulated market which gives consumers a great experience that draws them away from the illegal market and provides the state with revenue.
— J Gary Pretlow (@JGPretlow) October 21, 2021
We have the opportunity to have the largest and most exciting sports betting industry in the country, and so I am excited that the Gaming Commission is moving forward with the mobile sports betting licensing process.
— J Gary Pretlow (@JGPretlow) October 21, 2021
While the former Governor had a very limited vision for how a sports betting market could operate in New York, we now have the opportunity to get this right. We should license all applicants and allow them to compete for the business of New Yorkers.
— J Gary Pretlow (@JGPretlow) October 21, 2021
Pretlow, and his Senatorial counterpart Joseph A. Addabbo, Jr., originally pushed for and envisioned a New York online sports betting program with multiple skins and a number of options for New Yorkers.
Former Gov. Andrew Cuomo supported a limited market for sportsbooks in New York as means to increase potential revenue for the state.
Pretlow’s call for all companies to be licensed came just days after the New York State Gaming Commission published a “final tax rate matrix” for all companies to follow. The final tax rate matrix called for a 64% tax rate for a minimum online sports betting program of just two operators and four providers.
Groups that did not originally propose a tax rate of 64% have until Monday to amend their bids. If the bids are not amended to include a 64% tax rate, than they will be disqualified from license consideration.
The tax rate matrix decreases with additional operators and providers, as you can see here.
New York received six separate bids from groups vying for a piece of online sports betting. By our count, if all companies were licensed that would bring the platform providers up to a total of 13 and platform operators up to 17.
This would result in a tax rate of 35%, based on the state gaming commission’s final tax rate matrix.
Six Bidding Groups for Online Sports Betting Licenses
Here are the collective group bids and the potential operators/providers in each:
Bid 1: Bet365 (Primary Applicant)
- Proposed tax rate: Unknown
- Projected revenue to New York: Unknown
Bet365 is listed as the only operator and provider in the bid. Most of the bid’s information was redacted, but Bet365 touted its customer base of 63 million as a primary driver of its popularity.
The company noted it has marketing agreements with the Yankees, Mets and Jets. It has current signage agreements at Yankees Stadium, CitiField and MetLife Stadium.
The group has no revenue sharing agreements in place with any Native American tribes in the state.
Bid 2: Kambi (Primary Applicant), Fanatics Sportsbook and Penn National Gaming
- Proposed tax rate: Unknown.
- Projected revenue to New York: $1 billion in incremental tax revenue over the next 10 years.
Kambi is listed as the bid’s platform provider, with Fanatics Sportsbook and Penn National Gaming serving as the group’s platform operators.
Penn National Gaming and the Fanatics Sportsbook entered into revenue sharing agreement with the Saint Regis Mohawk Tribe. The agreement includes a 5% revenue share and a minimum guaranteed annual payment of $2.5 million regardless of Penn and Fanatics performance in the New York market.
Jay-Z was listed as the Vice Chairman of Fanatics Sportsbook in the group’s bid for a license. According to the application, he will provide strategic and creative direction on the expansion and growth of the Fanatics Sportsbook in New York and across the country, per the company.
Bid 3: FanDuel Sportsbook (Primary Applicant), DraftKings, BetMGM, Bally Bet
- Proposed tax rate: 50%.
- Projected revenue to New York: See Below.
FanDuel Sportsbook is listed as the group’s primary applicant, but all four companies, including DraftKings Sportsbook, are listed as platform providers and platform operators in the bid package. This would provide New York with up front licensing fees of $100 million.
The group commissioned a revenue report from Frontier Economics Analysis of the state’s mobile sports wagering market. Here is what the report notes New York could expect in online sports betting tax revenue in the first five years if the group’s bid was accepted:
- Year 1: $585 million
- Year 2: $929 million
- Year 3: $1.352 billion
- Year 4: $1.639 billion
- Year 5: $1.753 billion
According to information in the bid package, the four companies represent 78% of the U.S. online sports betting market. The group did not advocate bringing in additional platform operators for customers.
“A higher tax rate or accepting additional operators will inhibit the market by creating economically unfeasible conditions,” the group wrote in its bid package.
The group noted it has a revenue sharing agreement in place with Seneca Nation of New York.
Bid 4: FOX Bet
- Proposed tax rate: Unknown.
- Projected revenue to New York: Unknown.
FOX Bet is listed as the application’s sole provider and operator. The vast majority of information in the bid has been redacted, so very little is publicly known about the company’s plans for New York.
The company lists a partnership with the New York Post as a marketing piece.
Bid 5: Kambi (Primary Applicant), Caesars, Wynn Interactive and PointsBet
- Proposed tax rate: 51%
- Projected revenue to New York: $892.5 million in sports wagering taxes per year with nine operators versus a projected $808 million in sports wagering taxes per year with the minimum number of four operators.
Kambi, Caesars, Wynn Interactive and PointsBet are all listed in the bid as platform providers, which would provide New York with $100 million in up front license fees.
The bid includes a possible nine platform operators that would project to $892.5 million in sports wagering taxes per year. If the gaming commission only selects four operators, it would project to $808 million in taxes per year for the state.
“The data shows that there are diminishing returns once enough operators with the financial resources and customer bases are included. For example, in New Jersey, the top nine operators generated 98.9% of the mobile wagering revenue (Source: Eilers & Krejcik Trailing Twelve Months Ending May 2021).” The group wrote in its bid.
The group has partnered with the Oneida and St. Regis Mohawk Compacted Tribes in a revenue sharing agreement. Each tribe will receive a guaranteed revenue stream plus shared upside with the licensed operators based on performance.
According to information in the bid, the Oneida Indian Nation will deploy 100% of proceeds from its revenue sharing arrangement into community programs for Oneida’s New York residents.
Bid 6: theScore
- Proposed tax rate: Unknown
- Projected revenue to New York: Unknown.
theScore is listed as the bid’s primary provider and operator. The company was recently acquired by Penn National Gaming and it’s unknown at this time how the company’s bid will be affected.
The company currently offers online sports betting in New Jersey, Colorado, Iowa and Indiana.
The company noted it has executed several marketing campaigns in Canada, which recently legalized single-game sports betting.
