As sports betting makes its long awaited debut in New York after months of legislative deliberation, many operators are now concerned about the potential implications of revenue share policies.
Revenue share in the state could equate to a 50/50% split between operators and state administrators, with New York State Governor Andrew Cuomo targeting $500 million in annual sports betting turnover.
Discussing the topic on the latest episode of the Legal Sports Report, co-hosts Dustin Gauker and Adam Candee discussed how despite the high revenue share, New York could be a state which operators ‘cannot afford’ to not be licenced in.
“We could see as much as 60% of revenue share going to the state from whoever wins these bids from New York,” Gauker remarked.
“We now know what the process is starting to look like for this so we’re looking at this at a floor of 50% – if you want to win the bid, how much higher do you need to go because obviously this is being competitively bid and everybody would like to be in New York, but you also want to make it profitable.
“How high can you go on the revenue share to make this worth it? It sounds like some people probably think 55-60%. There is still room to make money, or if you value the market that much – you can’t afford to not be in New York – you have to overpay to get that market access.”
“Who can afford to give up 50 to 60% of their revenue, it’s not a startup who’s in one other state, nor is that company going to score well in the RFA because there’s heavy weight in the RFA for experience lifework integrity and basically knowledge of running sports betting that seems to favour the larger of the companies.
Building on Gauker’s comments, Candee highlighted the ‘super-bids’ featuring DraftKings, FanDuel and MGM, major operators which are usually key competitors in other states.
“I find it fascinating when we hear about these potential super-bids of DraftKings plus FanDuel plus MGM, it might be sort of a one off for New York that doesn’t exist anywhere else.”
Gauker responded: “If you’re in New York and you look at a bid that’s coming in from all of those, can you afford to not have the three biggest sportsbooks in New York if you’re trying to make this ridiculous amount of money?
“It is fascinating that we are seeing these super-bids, and if smaller operators are going to pull together to try to create one major operator.”
Meanwhile, in the neighbouring state of Massachusetts, legalised sports betting has passed the state House of Representatives and is now being considered by the Senate.
Gauker commented: “We’re seeing movement in the House, we’re supposed to see movement in the Senate in the not too distant future. Nobody seems to have agreed – we thought when this process would restart in the summer that we would see a homogenous approach, but not everybody is on the same page.
“We have different bills, there’s going to have to be some working out of this – whether it happens through amendments or Conference Committees – , but I think Massachusetts has to be seeing the rest of the states around them, basically all their neighbours are moving towards sports betting – Connecticut, New York, Rhode Island already has it – it will end up being behind if it fancies itself a gaming state and wants to be on the forefront of this stuff.”
Source – Legal Sports Report YouTube Channel
