Breakdown Of Latest Bill To Legalize Online Casinos In New York

Written By Grant Lucas on February 17, 2023

Another year brought another proposed bill to legalize online casinos in New York. Despite slim odds of passage, Sen. Joe Addabbo has not been deterred from regulating iGaming in the Empire State. If nothing else, this latest legislative iteration could become the new template for future efforts.

For months, Addabbo has emphasized the importance of several factors when it comes to legalizing NY online casinos: responsible gambling, first and foremost; and creating a new revenue stream for the state while also preventing New Yorkers from taking their iGaming business to other states or illegal sites.

This bill, S4856, not only would offer an array of games but also install extensive responsible gambling guardrails rarely seen in other jurisdictions.

Read more: Senate Bill Aims To Legalize Online Casinos In New York

Responsible gambling emphasis in NY online casino bill

While sitting at the very bottom S4856, the responsible gambling section of this bill no doubt carries the most weight for Addabbo. In order to obtain and retain an iGaming license in New York, according to the proposal, each operator must implement 13 measures relating to responsible gambling.

Among the conditions, NY online casinos must list information to customers who need assistance for compulsive play. That includes a toll-free number for “reputable resources.”

In addition, gaming platforms must allow account holders to establish betting limits on a daily, weekly and monthly basis. This would limit how much money users can deposit during the appropriate period of time. Similarly, when a customer exceeds $2,500 in lifetime deposits, NY online casinos must prevent any additional gambling until the account holder acknowledges he or she went over the limit, is offered a way to set responsible gambling limits or even close the account, and is presented with resources for responsible and problem gambling resources.

Conditions abound, such as the requirement of iGaming operators to create publicly accessible internet pages dedicated to responsible play. Here, users will find information and links to risks associated with gambling and potential signs of problem gambling, including a link to a problem gaming page maintained by the Office of Addiction Services and Supports (OASAS).

Finally, NY online casinos must submit annual responsible gaming plans to the New York State Gaming Commission (NYSGC) and problem gaming plans approved by the NYSGC in consultation with OASAS. The latter would include objectives of the plan and procedures for “identifying users with suspected or known problem gaming behavior.”

Bill carves out ample funds for responsible gambling efforts

As detailed in the bill, parties interested in obtaining NY online casino licenses would pay $2 million in licensing fees ($10 million for independent contractors using a brand from another licensee) and a 30.5% tax rate on gross gaming revenue.

That tax would go toward the state lottery fund for education aid. However, that state tax revenue would also prove a separate purpose.

As spelled out in the bill proposal:

“From the state tax collected, the commission shall distribute, in conjunction with the office of addiction services and supports, eleven million dollars annually for problem gambling education and treatment purposes.”

Since the launch of online sports betting in New York, a growing concern has surrounded how much money the state puts toward responsible and problem gambling in the state. Last fall, John Coppola, executive director of the New York Association of Alcoholism and Substance Abuse Providers, noted that New York spent just $5.7 million on problem gambling.

“That’s less than 1% of revenue from sports betting,” Coppola said during a Racing and Gaming Conference panel. “That’s ridiculously inappropriate and unacceptable.”

How NY online casino industry would look

The bill notes that the state would carve out one online skin per licensee. But the number of potential operators could exceed 20 online casinos in New York.

Qualified applicants to pursue licensing include commercial casinos in the state, including the four upstate and three incoming downstate casinos. Tribes — including the SenecaOneida and Mohawk — would also be eligible to apply, as would video lottery terminal facilities that conduct racing. All nine existing online sportsbooks in New York can also go after a license, and three final licenses would undergo competitive bidding by outside entities.

Each licenseholder would have authorization to offer a variety of online casino games, including slots, table and live dealer games. The bill requires live dealer studios to exist within state lines but not specifically at gaming facilities.

Chances that NY online casinos bill passes in 2023

The clock has started for potential passage this year, with lawmakers facing a June 8 deadline to work legislation through committees, onto the floor and enacted into law.

While legislators could discuss the matter again when they reconvene in the fall, New York online casinos would have to wait until 2024 for potential legalization — a fact that even the most ardent supporters have conceded will happen.

It didn’t help the cause that Gov. Kathy Hochul excluded online casinos in her January executive budget for the 2024 fiscal year. It doesn’t necessarily mark the end of 2023 legalization, Addabbo emphasized at the time. But, he added: “It’s not a good sign.”

Addabbo noted that each year New York avoids legalizing iGaming, money continues to go to neighboring states as well as the illegal market.

That should grab the attention of his colleagues. After all, as noted in the bill proposal, online casino gaming revenue exceeded $1 billion in New Jersey and Pennsylvania, leading to about $120 million in tax revenue. After establishing itself as the top sports betting industry in the nation, New York, per the bill, “would quickly become the national leader in online casino gaming.”

The proposal estimates that New York would generate upward of $475 million in annual state tax revenue “based upon conservative market estimates.” That does not include roughly $150 million in onetime license fees alone.

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Grant Lucas

Grant Lucas is the managing editor for PlayNY. A longtime, award-winning sports writer, Grant has covered gambling and legal sports betting since 2018, when he got his start reporting on the New Jersey and Pennsylvania industries. He now oversees PlayNY as New York expands legalized gambling to sports betting and online casino gaming.

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