At least one bid came out swinging for a mobile NY sports betting license by offering unprecedented cash for market access.
The final tax rates to be paid by online New York sportsbooks were obtained by Tom Precious of the Buffalo News Tuesday. The highest bid offered 64% of gross gaming revenue for up to five operators in the state. New York regulators have not confirmed the rates to LSR.
That, clearly, is a hefty chunk of revenue, but it is not a complete surprise. It is a true 64% as well because the proposed regulations do not allow promotional spend to be deducted from taxable revenue.
The rate becomes a bit more manageable with more operators added to the market, but it will likely still cost every license holder at least 50% of their sports betting revenue.
How to read NY sports betting tax matrix
Here is the most frustrating thing about the tax rate matrix: there is no need for it to be a matrix.
The y-axis of the matrix representing the number of platform providers approved is unnecessary. The number of platform providers has no impact on the tax rate, meaning this complicated matrix is really just a simple list:
- Four or five operators would pay 64%
- Six operators would pay 62%
- Seven operators would pay 60%
- Eight operators would pay 58%
- Nine operators would pay 51%
- 10, 11 or 12 operators would pay 50%
- 13 or more operators drops the tax rate to 35%
Which NY sportsbook bid the top rate?
Remember, these tax rates could reflect just one of the six bids. The offer of 51% at nine operators matches what Kambi offered in its five-operator bid.
The New York State Gaming Commission ranked the bids by score, then selected the highest tax rate offered by one of the bidders.
Bidders now have to agree to match the tax rates by 5 pm Monday. They otherwise will be ineligible to win a license.
Breaking down the possibilities in New York
There are 14 operators in the six bids, so theoretically all could be approved at the 35% rate.
It seems unlikely the NYSGC would allow all 14, though, considering the steep dropoff in tax dollars.
It might be easy to scratch two bids out, though. Penn National closed on its acquisition of Score Media this week. Considering Barstool Sportsbook is partnering with Fanatics Sportsbook in a bid there’s likely no need to continue theScore Bet’s standalone bid, especially with that $25 million platform provider fee attached.
Flutter, likewise, might not see the point in continuing its solo bid for FOX Bet with FanDuel included in one of the two super bids.
That would leave four bids with 12 operators that would be taxed at 50%, the minimum rate former Gov. Andrew Cuomo wanted to see:
- Bally Bet, BetMGM, DraftKings Sportsbook and primary applicant FanDuel Sportsbook
- Bet365‘s solo bid
- Barstool Sportsbook, Fanatics Sportsbook and primary applicant Kambi
- Caesars Sportsbook, PointsBet, Resorts World, Rush Street Interactive, WynnBET and primary applicant Kambi