Nine sports betting operators received approval to offer mobile wagering in New York by the state’s Gaming Commission.

Operating in the market, which is expected to become the top American market for sports betting once all applications launch, won’t come cheap. Gross revenues will be taxed at 51%, and the eight platform providers the commission also approved must each pay $25 million for a 10-year license.

But, at least for some that got in, they see it as the price to do business in a state with 20 million people that’s also exploring other opportunities to expand gaming.

BetMGM CEO Adam Greenblatt said in a statement that having a presence in New York is crucial to being a leader in sports betting and online gaming in the U.S. BetMGM is the mobile gaming arm of Las Vegas-based MGM Resorts International through a joint partnership with sports betting operator Entain.

MGM Resorts also owns the Empire City Casino in Yonkers as well as casino resorts in Springfield, Mass., and Atlantic City that draw New York gamblers.

“BetMGM is particularly well-positioned to become a leader in the state given the strength of the (loyalty rewards program) M life customer database, close proximity of Empire City Casino to support our omnichannel strategy, and parlaying our already leading positions in nearby states,” he said.

BetMGM was part of a four-company bid that included Bally Bet, DraftKings and FanDuel. FanDuel, DraftKings and BetMGM are considered by most industry experts as the top three online sportsbooks in the U.S.

Bally’s Corp. has been one of the fastest-growing casino operators in the last couple of years, thanks to an aggressive acquisition strategy. The Rhode Island-based company is interested in pursuing one of three casino licenses for the downstate New York region. The state currently has a request for information solicitation open as officials determine how to proceed with awarding those licenses.

MGM Resorts has also expressed interest in a license as that would allow them to offer live table games and expand their facility at the Yonkers Raceway. Currently, it can only offer electronic games.

The other group that won was one of two bids led by platform provider Kambi Group. Its winning bid included Rush Street Interactive, Caesars Entertainment, Wynn Interactive, PointsBet and Resorts World.

Kambi provides the platform for Rush Street, which operates the sportsbook at Rivers Casino and Resort in Schenectady.

“Kambi has proven time and time again that we know what it takes to succeed in some of the world’s most competitive sports wagering markets,” CEO Kristian Nylén said in a statement. “Therefore, we are confident our mobile sportsbook will be just as popular with New Yorkers as our on-property product, which has been live in the state for the past two years.”

The Kambi-led proposal earned the highest marks from evaluators who graded proposals submitted in August.

Unlike most other states that simply awarded licenses through an application process, New York chose to offer them via a competitive bid process. It was the idea of then-Gov. Andrew Cuomo who said he wanted to generate as much money as possible for the state.

Under the solicitation, bidders were required to propose their own tax rates based on the number of providers and operators chosen. Bidders with qualifying scores were then invited to review the final table. They needed to agree to those rates in order to be considered for licensure, although the state did not guarantee.

The state set a minimum of accepting two platform providers and four operators, though the Gaming Commission said it would award more licenses if it made financial sense.

The Kambi-led proposal called for a tax rate of 64% for its group of four platform providers and five operators. After the commission deemed that as the top bid, it then considered the two remaining finalists, the four-team FanDuel entry and a bid by Bet365.

State officials chose to offer licenses to FanDuel, BetMGM, DraftKings and Bally Bet. As a result, the tax rate dropped to 51%. They declined, however, to extend a license to Bet365. While Bet365 is a large international sportsbook, its only U.S. market, for now, is New Jersey, and it is not considered a major operator there.

The Gaming Commission received six applications for licenses. Another Kambi-led proposal that included Penn National Gaming’s Barstool Sportsbook and online retailer Fanatics, which included a partnership with Brooklyn-native Jay-Z, did not earn a high enough score to be considered for licensing. Neither did single proposals by both Fox BET and theScore Bet.

According to the New York State Assembly’s Mid-Year Update, published this month by the Assembly’s Ways and Means Committee, the state is expecting to receive $98 million in revenue for the 2021-22 fiscal year, which ends in March. Mobile sports betting is expected to generate $357 million for the state in the 22-23 fiscal year.

Gaming industry analysts have questioned whether the high tax rate will negatively impact legal sportsbooks’ chances to compete with unregulated offshore applications and illegal bookies, neither of whom bear the costs of a regulated market.

However, New York officials are hopeful mobile sports betting can eventually generate up to $500 million in tax revenues annually.

“Sports wagering represents a significant potential income source for our state,” Gov. Kathy Hochul said in a statement to The Center Square. “The Legislature passed a law that required the Gaming Commission to undertake a competitive bid process to get mobile sports wagering up and running. The Commission undertook that process, and we look forward to creating opportunities for more people and for New York State.”

Also on Monday, the Gaming Commission approved the regulations for mobile sports betting. They will become effective once they’re printed in the State Register, which could happen as early as Nov. 24.

From there, the sportsbooks would be allowed to begin operations. However, there are several steps they will still need to complete. That includes the installation of servers at New York’s upstate casinos. By law, the servers must be located at one of the four licensed venues.

In a statement, state Sen. Joseph Addabbo, D-Queens, said he hopes the operators can start taking bets in January, leading up to the Super Bowl, which is one of the most popular betting events in the country.

“With New York moving closer to the goal line to witness its first mobile sports bet, we must remain focused on providing a premier product and giving New Yorkers the best mobile sports betting options in order to effectively compete with neighboring states like New Jersey,” said Addabbo, who chairs the Senate Racing, Gaming and Wagering Committee. “I am confident that with the announced, credible winning bids, we have the potential of eclipsing other states in mobile sports betting handle, raise significant revenues and funding for education and youth sports, while effectively addressing the problem gaming issue.”

This article was originally posted on Nine operators selected to offer online sports betting in New York