New York Selects Online Sportsbook Providers to Open Big Market

New York Selects Online Sportsbook Providers to Open Big Market
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The New York State Gaming Commission on Monday approved nine gaming operators — bunched together into two groups — to offer legal mobile sports betting for the first time in the nation’s fourth most populous state.

Sports betting in New York proponents are hopeful bettors will be able to use their smartphones and computers in wagering on live events in time for the NFL’s Super Bowl in February.

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One group that won licensing approval includes DraftKings, BetMGM, Bally’s Corp. and FanDuel.

The other group consists of Caesars Entertainment, Wynn Resorts, PointsBet Holdings, Rush Street Interactive and Genting’s Resorts World. This group is headed by the Kambi Group, a technology provider.

The operators are required to partner with a land-based casino. The casinos will receive a $5 million annual hosting fee from the sports-betting companies.

Failing Bid

Another group seeking to win licensing approval included rapper Jay-Z, Fanatics and Barstool’s Penn Sports Interactive.

This group’s failure to win approval on Monday came not long after Barstool founder David Portnoy was accused of “unwanted overly rough and violent sex,” according to the New York Post, citing an unnamed gaming source. Portnoy has denied the allegations.

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Huge Potential

Expecting the betting through the BetMGM New York Sportsbook to soon become a reality, the CEO of the company, Adam Greenblatt, noted that New York "has the potential to be one of the largest sports betting markets in the U.S.”

Nevada-based MGM Resorts, which operates BetMGM, also owns Empire City, a harness racing track and casino in Yonkers, New York, just north of the Bronx.

The commission’s decision makes New York, with a population of more than 19 million, one of the largest states to offer mobile sports betting.

Mobile wagering began last week on the Seminole Hard Rock Sportsbook app in the third most populous state, Florida. The start of sports betting in Florida is being challenged in a federal court.

Legal sports betting is not offered in the two most populous states, California and Texas.

Sen. Joseph Addabbo, a New York City Democrat, predicted the Empire State ultimately will “eclipse” New Jersey in sports betting.

“This is big,” Addabbo said before Monday’s vote, according to Bloomberg.

In September, New Jersey became the first state with a monthly sports-betting handle of $1 billion. The “handle” is the amount of money wagered on sporting events.

At least 90% of New Jersey’s sports betting is conducted on mobile devices, with a portion of that coming from New Yorkers crossing the state line to use their smartphones in placing wagers.

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High Tax Rate

In New York, mobile sports betting operators will pay a 51% tax for 10 years. That equals New Hampshire’s highest-in-the-nation rate, also at 51%. The tax rate in New Jersey is 13%.

In an earnings call last week, Penn National Gaming CEO Jay Snowden said gaming operators will have difficulty turning a profit in New York with a high tax rate. In 2020, Penn National bought Barstool Sports and markets its app.

“I don’t think a single operator will make money in New York,” Snowden said.

However, Snowden noted that the state will make money from a tax rate at that level.

In April 2021, then-Gov. Andrew Cuomo, D-N.Y., agreed to a budget built in part on revenue anticipated to come in from mobile sports betting. Two years earlier, the first legal sports bets were placed at on-site sportsbooks in New York casinos.