Even the best-laid plans often go awry, and so it is in NY sports betting.
Four companies moved ahead of the game and had first-skin access deals for the market months and even years ago:
- DraftKings, partnered with Del Lago
- FanDuel, partnered with Tioga Downs
- Bet365, partnered with Empire Resorts
- BetRivers, affiliated with Rush Street‘s Rivers Casino
So who is in the driver’s seat?
Good and bad news for DraftKings
DraftKings stock dipped 2% Wednesday, which Susquehanna analyst Joe Stauff attributed to the New York news and the loss of that access.
“The license bidding process is really a jump ball,” Stauff said.
However, he noted DraftKings was “notably advantaged” in any bid thanks to the number of New York customers it already services.
“By awarding DKNG and FanDuel licenses in NY, the state can recapture a relevant amount of business overnight, creating another notable advantage for winning a license,” Stauff wrote.
DK also runs sports betting in New Hampshire – the market that Governor Andrew Cuomo wants to emulate. Crucially DraftKings was quick to launch after winning the contract, and speed to market will be a key determinant in the NY sports betting process.
FanDuel in the driver’s seat?
FanDuel also caters to a lot of NY bettors, arguably even more than DraftKings given the power of its retail presence at The Meadowlands. FanDuel said previously more than 20% of its New Jersey GGR comes from NY residents. That is a lot of tax revenue that potentially could be brought back over the border.
The company might have another advantage because it could offer multiple skins (Fox Bet, FanDuel) on one tech platform. That assumes the company can work out its legal differences with Fox. That situation escalated over the weekend, with Fox threatening to suspend FanDuel TV advertising.
On a conference call on Wednesday, Sen. Joe Addabbo Jr. stressed the state wanted “a top-tier” operator with the ability to handle New York volume. That would put seemingly put FanDuel and DraftKings in prime position.
Where does that leave BetRivers?
Rush Street also saw it stock dip a couple of percentage points on the news because it no longer has the inside track on a skin.
It is also reliant on Kambi for sports betting tech. Stauff noted that paying a provider could limit Rivers’ ability to give away further chunks of revenue to the state.
Indeed, NY is going to be an “extremely challenging ,” said Bank of America’s Shaun Kelley.
“If [operators] will ever be able to make a profit is still unclear,” Kelley added.
Of course, multiple Kambi operators want to be live in New York. Could we see Kambi bid for a platform with BetRivers, Barstool Sportsbook and the Seneca tribe as skins?
The dark-horse contender
Finally, the structure is not great news for bet365. The firm bought equity in Empire Resorts back in 2018 specifically to gain market access to New York.
But now, the UK-based operator does not have an obvious bid partner. Bet365 is a global giant but a small player in the US. Would other firms be willing to invite that competition into their bid?
As Stauff said, a company bidding for a platform spot is likely to prefer a sub-scale operator as a skin partner.
Susquehanna said in a note on Thursday:
“We estimate all bidders will include the three in-state tribal casino operators (Oneida, Seneca, Mohawk) as part of their skins considering they are NOT competitive threats for any of the bidders. And the state will value these inclusions higher than commercial operators under the bidding rules.”
The budget language stipulates that bids partnering with tribal casinos receive higher scoring in the still-undetermined RFP process.
Other runners for NY sports betting
Elsewhere, Stauff said the structure was no bad thing for Penn National, which was always a relative outsider to get into NY via second-skin access.
It is a similar story for BetMGM, which was skinless under the old model. Now the operator has a chance and owns its own technology.
MGM also has links with the New York Lottery via its Empire City casino.