Gaming Commission Issues Request for Applications of Web-Based Betting Providers

Harris Beach PLLC

After an unexpected delay, the New York State Gaming Commission recently issued a Request for Applications (“RFA”) to begin the competitive application process through which the Commission will select two or more platform providers and four or more sports wagering operators. With the release of the RFA, applicants now have a clearer understanding of what the process will involve, though some details remain unknown.

Most importantly for applicants, the RFA announced upcoming deadlines. Applications are due by 4:00 P.M. on August 9, 2021. Applicants may also submit questions to the Commission in two rounds. Questions are due July 16 and 27 at 3 P.M., respectively, with the Commission’s responses due six days later. After the application deadline, applicants may make oral presentations of their applications beginning on September 1, 2021. While the Commission announced the above deadlines, the Commission has been hesitant about guaranteeing that it will issue licenses within the statutory window of 150 days, stating it is “unable to determine the time required in advance.”

Beyond deadlines, the RFA clarified how the Commission will evaluate applications. Applicants will have to consider carefully the emphasis the RFA places on the Commission’s goal of providing maximum long-term revenue to the state. For example, to achieve this goal, the Commission’s evaluation methodology places the greatest weight on an applicant’s “expertise” in their market, along with that of their operators. The methodology also places considerable weight on the “integrity, sustainability and safety” of the platform,” which will help ensure a long, profitable, relationship between the State and eventual licensees..

However, somewhat controversially, the evaluation methodology provides for bonus points where an application proposes a higher tax rate to help achieve the goal of maximum revenue. Thus, if an applicant submits a proposal with a tax rate of 12.5 to 30%, they receive 3 points towards their total. If, however, an applicant proposes a tax rate of 50%, the applicant will receive 20 points. The final tax rate is likely to be high, given the bonus points system and that state law requires that all eventual licensees to be taxed at the same rate..

Finally, the RFA detailed the sections required in the application. The Commission tailored these required sections to gauge which applicants will provide the greatest long-term revenue to the state. In addition to sections on several of the evaluative criteria mentioned above, such as experience, expertise, and a section dealing with tax-and-profit scenarios, the Commission requested that applicants indicate how they will quickly set up betting with as many users as possible.

Despite some unknowns and the possibility of a high tax rate, the Commission successfully provided applicants with a clear understanding of the immediate steps they must take.

Summer Associate Harrison Hartsough contributed to this article.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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