The New York State Legislature passed the 2021-2022 budget late Wednesday night as the Assembly gave the $212 billion spending plan its final approval, including a plan for legal online sports betting.
The state will select at least two companies through a competitive bidding process this year to operate online betting, according to language in the spending plan. Gov. Andrew Cuomo said he would sign the measure.
The budget language requires the Gaming Commission to issue a request for proposals (RFP) by July and award licenses later this year. The commission must select two platform providers, but they may partner with multiple operators, or skins. Cuomo successfully pushed for a model where the state would contract directly with a betting provider, which he said would let the state secure a higher tax rate on wagers.
Providers will be selected based on how they would “maximize sustainable, long-term revenue for the state,” according to the budget bill. The commission will consider a provider’s proposed tax rate, marketing plan, track record and ability to start operating quickly, the bill says.
State Sen. Joe Addabbo Jr., chairman of the Senate Racing, Gaming and Wagering Committee, said he hoped the Gaming Commission would move quickly to set up the program. “There’s no reason why we shouldn’t be able to bet on the Super Bowl,” he said, referring to the NFL championship scheduled for February 2022.
Since the online operator would need to be partnered with one of the state’s commercial or tribal casinos, potential frontrunners would be DraftKings, FanDuel, Bet365, and BetRivers. These operators would then be able to subcontract mobile betting contracts known as “skins” to other providers; according to Addabbo, that number could be “eight or 20 skins, but we agreed on no less than four.” There is no cap on the number of skins, Assemblyman J. Gary Pretlow said, and the total will amount to the number of skins the “market can bear.”
Under a revenue-sharing agreement with the state and the selected providers, New York will likely seek a minimum of 50% of gross gaming revenues (GGR) from the selected online sportsbooks, Sports Handle reports. Cuomo, through the commission, could seek as much as 55% of the provider’s GGR from online sports betting proceeds in New York.
Also, a one-time fee of $25 million will be charged to mobile sports betting platform providers. Mobile servers will be placed on the floors of New York commercial casinos to satisfy constitutional concerns, with some revenue headed to the casinos, Addabbo said.
Funding of around $6 million a year will be added for new addiction program money, and nearly $5 million will be provided to youth sports, with a greater percentage earmarked to education, according to Addabbo.
There will be a preference, but not a mandate, for official league data. “League data, to me, is very accurate. The fact that it is preferred would help — this is obviously the work we do post-budget,” Addabbo said.
A budget provision that would have permitted up to three additional casinos in downstate areas, including New York City, was rejected by lawmakers, as reported by The Wall Street Journal. Licenses for that area are on hold until 2023. However, the state budget did call for the Gaming Commission to solicit interest from prospective bidders and write a report about casino expansion.