NY Publishes Proposed Rules for Mobile Sports Wagering

New York State Gaming Commission publishes proposed rules in the State Register, rejects several proposals from DraftKings, others.
NY Publishes Proposed Rules for Mobile Sports Wagering
By
November 30, 2021

Regulators in New York State have published a list of proposed rules and regulations that would govern mobile sports betting, a critical step toward making the activity a reality in the Empire State.

The proposed rules were published in the November 24 issue of the New York State Register. The announcement of the proposed rules covered about three pages of the 182-page issue.

Publication of the rules follows a decision by the New York State Gaming Commission (NYSGC) to recommend issuing mobile sports wagering licenses to nine operators on November 8.

To accommodate mobile sports betting, the NYSGC proposed changes to Title 9 of the New York Codes, Rules and Regulations (NYCRR), which covers the entire executive of state government and directly governs the commission itself under Subtitle T.

Specifically, the NYSGC called for amending Part 5329 of the NYCRR, which covers sports wagering, and adding Part 5330 to cover mobile sports wagering. The regulator added that all of the amendments would conform to the state’s Racing, Pari-Mutuel Wagering and Breeding Law.

Part 5330 includes verbiage that covers:

  • Occupational licensing requirements for individuals;
  • System requirements and minimum requirements for internal controls;
  • Restrictions on wagering, including by minors, prohibited persons and proxies;
  • Requiring the establishment of controls to identify unusual betting activity and the hiring of a provider to monitor such activity;
  • Paying and reporting tax revenue to the state;
  • Procedures for reporting and reconciling gross gaming revenue; and
  • Requirements for promotions, skins and geolocation requirements.

The verbiage also stipulates that mobile sports wagering licenses will have terms of up to 10 years.

Most suggestions by industry rejected

The proposed rules did not go unnoticed by the industry, including by DraftKings, one of the nine operators awarded a license by the NYSGC. The commission said it received seven comments in total and published them at the tail end of the State Register submission.

In its comments, DraftKings suggested that employees of a mobile sports wagering licensee be allowed to wager on the platform of another licensee. But the NYSGC disagreed, on the grounds that the public “may perceive a compromise in the integrity of sports wagering if employees of one licensee used their knowledge of wagering data to gain wagering advantages, to the perceived disadvantage of bettors in the public who lack access to such information.”

DraftKings also suggested that the commission’s requirement that all mobile sports wagering software be subject to independent laboratory testing instead be limited to just “critical” software, but the regulator again disagreed. “All software relating to mobile sports wagering has the potential for critical operational effects and should be tested to ensure compliant performance,” the NYSGC said.

The commission also shot down suggestions by DraftKings to remit mobile sports wagering taxes to the state on a monthly, rather than a weekly, basis, and that a requirement for a link to a customer complaint process be placed on a customer’s account page, rather than on a skin’s main page. “The requirement for the complaint link to be displayed prominently on the skin’s main page ensures that the patron complaint process is easy to locate,” the commission said.

Penn National Gaming, which submitted a bid for a license but wasn’t selected, suggested reducing the amount of time for the NYSGC to approve sport betting promotions from 15 days prior to just 48 hours. Penn National also suggested that operators not be required to request approval for promotions that are “structurally similar” to those already approved by the commission.

The commission disagreed with both ideas. “Pre-approval of promotions enhances regulatory control and consumer protection, the suggested time-limit for submission would be too short to allow for timely regulatory review and licensees should not determine which promotions are ‘structurally similar’ to previously approved ones,” the NYSGC said.

Not every suggestion was rejected. The New York Racing Association (NYRA) said it was interested in offering its advance deposit wagering (ADW) platform, under which a customer could use an electronic wallet to place wagers on either ADW or a mobile sports betting platform. Payouts would also be deposited into the electronic wallet for winnings on either platform.

The commission said the NYRA’s suggestion for a single electronic wallet would need to comply with the aforementioned Racing, Pari-Mutuel Wagering and Breeding Law and other associated regulations.

Besides DraftKings, the NYSGC picked Bally Bet, BetMGM, Caesars Sportsbook, PointsBet, Resorts World, Rush Street Interactive (RSI) and WynnBET for mobile sports betting licenses. RSI owns the BetRivers and PlaySugarHouse brands – it’s not known which brand RSI plans to deploy in the Empire State.

Operators and the commission hope to launch mobile sports betting in early 2022, before Super Bowl LVI on February 13.

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