Sen. Addabbo: Downstate NY Casino Licenses ‘In Play’ As April 1 Budget Deadline Nears

Written By Mike Mazzeo on March 28, 2022 - Last Updated on March 31, 2022

As the April 1 deadline for the New York state budget nears, the three downstate casino licenses are considered “in play,” according to Sen. Joe Addabbo.

“Finer details are being worked on, but it’s still in play,” Addabbo told PlayNY.

Minority inclusion and online sports betting expansion will come down to whether it makes financial sense for the state.

“If reducing the tax rate (from 51%) means a reduction — even with the expansion of skins — of educational funding or revenue, then it wouldn’t make fiscal sense for the state to do it,” Addabbo said.

Addabbo and counterpart Assemb. Gary Pretlow have their sights set on those two significant gaming issues as negotiations ratchet up.

Home stretch for downstate NY casino licensing in state budget

The expedition of the three downstate casino licenses — up a year from 2023 to 2022 — was included in the initial budget proposal from Gov. Kathy Hochul, as well as the Senate one-house budget proposal. However, the Assembly rejected that outright.

Local support surrounds existing video lottery terminals (VLTs) Resorts World NYC and MGM Empire City to obtain those licenses. But those entities must go through an open bidding process just like every other potential licensee. They will have an advantage given the speed to market and would be able to add both table games (poker, blackjack, roulette, etc.) and a retail sportsbook while also hosting an online server.

Other entities, like Las Vegas Sands and Hard Rock, have expressed visions of potentially building a new casino in New York City. Historically, in the Assembly (as well as some in the Senate), many do not want casinos in NYC. Or, more specifically, in their respective districts.

As part of the Senate one-house proposal, the licensing fee for a downstate casino would be no less than $1 billion and the tax rate on slots no less than 45%. Those massive figures rankled some interested parties (for example, the idea of paying the same licensing fee whether you’re in Yonkers, Queens, or, say, Midtown or Brooklyn). But the state believes they are extremely valuable, and those parties will pony up for fear of missing out on the competition.

It remains possible, too, that stakeholders could negotiate those figures down. Potentially, that total could decrease to the $750 million range, as a Spectrum Gaming Group report from January 2021 estimated the cost at $500 million. Either way, the state could see upward of $3 billion added to its coffers, in addition to more jobs in the construction, gaming, entertainment and hospitality industries.

What about NY sports betting expansion, minority inclusion?

Currently, there are eight online sportsbooks up and running, with Bally Bet set to launch in H1 2022.

The 51% tax rate remains a controversial issue.

But the state has greatly benefited from this structure so far, taking in $153.3 million in tax revenue off of $4.35 billion in handle from through March 20. (Of that total tax revenue, 98% goes toward educational funding.)

The Senate one-house budget proposal did not allow for a tax rate reduction despite the potential addition of online sports operators (with minority inclusion).

Fanatics, for example, would like to enter the New York sports betting market, but only if the 51% tax rate is reduced. Fanatics has spent lobbying dollars (in the same range as titans FanDuel and DraftKings) in an attempt at a reduction.

If Fanatics received a license the first go-around, it intended to install Jay-Z as vice chairman of its sportsbook as well as a member of its board of directors. That’s still the sportsbook’s intention if it can secure a  NY license down the road. It would also need to secure an operator for its sportsbook platform.

“Michael Rubin’s not going to do it to lose (money),” a source told PlayNY.

Effect of lowering sports betting tax rate

FanDuel and DraftKings have held the top two spots in market share over the last seven weeks. Also, over that seven-week span, FanDuel, DraftKings, Caesars and BetMGM have had a combined 93.6% of the market share.

A tax reduction could incentivize others — like Bet365 and Penn National/Barstool Sports — to give it another shot at getting into the Empire State. But if it doesn’t change, that would be a daunting challenge.

But with the state making significant tax revenue in the early going, it’s unclear if it would have an appetite to make any changes so soon.

Photo by AP / Kathy Kmonicek
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Mike Mazzeo

Mike Mazzeo is the Lead Writer for PlayNY, arriving after covering several of New York's professional sports teams in a variety of roles for the past decade. Previously, he served as a beat writer and columnist covering the Brooklyn Nets (ESPN) and New York Yankees (New York Daily News). Mike also covered both the MLB and NBA nationally for Yahoo Sports. In addition, he served as a general assignment reporter for ESPN NewYork.com. He has also had bylines in the New York Times, New York Post, Newsday, Forbes and The Ringer. With PlayNY, Mike brings extensive coverage and unique story angles to what is projected to be one of the biggest and most lucrative online sports betting markets in the country. It's been an arduous and confounding process to get here, but 20 million New Yorkers (many of them die-hards) are now legally able to bet on their favorite sports teams across the state via online and mobile platforms.

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