Mobile sports betting in New York had an excellent start at the beginning of the year. During the first month following its official launch, it recorded close to $2 million in the handle and more than $70 million in state taxes. The numbers were so good that they propelled the state to the leading position in the US. In an attempt to follow suit with online casino gambling, NY legislators are now pending the approval of Senator Joseph Addabbo's proposed iGaming bill. The online casino bill was introduced to the Senate on February 24 and went straight into the hands of the Committee of Racing, Gaming, and Wagering.
What's in the Proposed Online Casino Gaming Bill?
Having played a critical role in the legalization of sports betting within the state, Senator Addabbo used his expertise to make a compelling case for his new bill. He included persuasive figures such as the $1 billion in revenues and $120 million in state taxes recorded by the online casino gaming markets in Pennsylvania and New Jersey in 2021. The senator also expressed his optimism regarding the great potential of NY's iGaming market. Addabbo is a firm believer that the market would immediately turn into a leader as soon as it would launch.
Accepted Casino Brands and Operators
The bill would provide exclusive access to the market for commercial and tribal brick-and-mortar casino operators. Commercial operators would need to provide the necessary space for the server and specific equipment at a cost to tribal operators looking to enter the market without striking a deal with other companies. The bill also specifies a two-skin limit per casino. Namely, each casino operator would be allowed to have up to two different mobile iGaming brands or wagering platforms for casino wagering.
Online casino operators would also be allowed to use their brands. Such a license would cost them $10 million per year, with the state collecting 25% of the winnings. Brick-and-mortar casino operators would need to pay $2 million per license. All licenses would be valid for 10 years. Land partners would also need to be featured prominently, similar to the case of Pennsylvania.
Online Casino Gaming Taxes and Money Usage
The bill proposes a 25% tax for online casinos. While still significantly higher compared to other states, it is smaller than Pennsylvania's massive 54% tax for slots or NY's intensively criticized 51% tax on sports betting. Most of the tax money would reach the State Lottery Fund for Education Aid, while also allocating $11 million for gambling education programs and gambling harm treatment facilities every year.
The bill does not include details regarding the license renewal procedure and costs. The New York State Gaming Commission will have to discuss these fees and establish the existence of any extra costs in the long term.
Online Poker and Slots Tourneys Up for Discussion
While Senator Addabbo’s proposed bill does not mention online poker per se, it also does not exclude it explicitly. In other words, the state's legislators will most likely insert poker into the standard list of accepted casino games that will be part of the market if the bill passes. Michigan is one example of a state that chose the same path once it legalized online casino gaming. The bill mentions examples of “authorized” games including “gaming tournaments in which players compete against one another in one or more of the games authorized”. This section could refer to both slot tournaments and poker tournaments online. Nonetheless, the bill is unclear regarding player-VS-player types of games.
At the same time, using simple population scaling and applying the proposed 25% tax, NY's online casino market would generate a minimum of $400 million in terms of tax revenue every year. Spending around 3% of that amount on trying to mitigate gambling harms may also sound too little for some critics opposing the bill.
Final Thoughts: Can NY Become a Leader in the iGaming Industry?
The fast pace at which the state managed to turn into the absolute leader in the sports betting industry in the country as soon is a strong argument for a “yes”. NY mobile sports betting operators gathered a whopping $1.6 billion in wagers by the end of January, and they held on to $124 million. State legislators think the online casino gaming market would accomplish the same feat in a short amount of time and turn into the national leader in the industry. Plus, New Jersey, the current leader of the iGaming industry in the US, recorded close to $1.4 billion from online gamblers in 2021. New York operators could generate around $2 billion given the state's population of approximately 19.5 million compared to New Jersey's 8.9 million.
The state's legislative session for 2022 will end at the beginning of June. In the meanwhile, a series of nonprofit organizations including the iDevelopment and Economic Association which is a powerful supporter of the bill argue that US states need to seriously take into account the regulation of online casino games together with sports betting options. Such efforts would guarantee that all consumers of iGaming and sports betting products would be properly protected against the perils of unregulated markets. At the same time, the state would reap additional tax revenues that would help its economy recover from the effects of the pandemic at a faster pace.
