NBL general manager Justin Nelson yesterday confirmed the association's expression of interest had been accepted.
Otago will now go through the formal bid process alongside five other entities - three from the North Island and two from Australia - for entry to the 2020 league.
That is due on May 31, giving the association just over a month to get it together.
Nelson said the bid consisted of working out the "nitty-gritty" of how the franchise would run.
Included in that was "logistics, budgets, planning, all the important thing that make a sports business work at the level required to compete in a competition this size".
Basketball Otago chairwoman Angela Ruske is pleased with the outcome, although she said the timeframe made things difficult.
Finding funds was the biggest challenge - it was looking for just over $200,000 in sponsorship.
However, she said work would begin on the bid and if it was not ready for this year, it would be for next year.
"It's good news; we're certainly keen to get it all going," she said.
"But we've got a goal of doing it at a high level and that it's going to have longevity.
"We've only got a month to get things sorted with that and it's possibly unlikely we'll get that bid in for this year.
"But certainly it will be there for next year if we don't make the progress in the next month."
She said it was important not to rush the bid and end up doing it poorly.
That would hinder both the quality of the team and its sustainability prospects.
The proposed sponsorship figure was "a significant amount" and would complement funds raised from camps and door sales.
It had not begun seeking sponsors yet, as it had "a few business ends to tie up" in setting up the franchise's company first.
In the coming weeks it would look to finalise the business plan and how the set up would run.
Once that received board approval, Basketball Otago could begin approaching potential sponsors.
Nelson said a mixture of things stood out about Otago's expression of interest.
The passion for basketball in the region and desire to be part of the NBL were notable.
However, it would consider its bid - should it make one - next to the others.
The league has nine teams at present and he said it still saw the optimal number to be from 10 to 12.
That makes it unlikely all six applicants would be accepted.
The Australian avenue was a new one the league had gone down this year with Tasmania's Southern Huskies.
Having two teams submit formal bids suggested that could be explored further.
Nelson said that had to come with balance, as it was New Zealand's national league.
