Sports betting in New York is enjoying a massive run. After launching in early 2022, the industry has generated more than $347 million in tax revenue for the Empire State.
This begs the question: What’s taking online casinos so long?
That query was addressed at Tuesday’s Racing and Gaming Conference in Saratoga Springs, where a quartet of expert panelists weighed in. The consensus was that this process is a slow one, and once New York online casinos are green-lit, brick-and-mortar casinos should not panic.
What’s the status of NY online casinos?
Bills to legalize online gaming fizzled in 2022. However, at Tuesday’s panel, Sen. Joe Addabbo seemed far from discouraged.
“It was a good starting point,” Addabbo said of the push that fell short this year. “Unfortunately, we had a lot going on this past session with the downstate licenses and other issues. We basically ran out of time, but it’s okay.”
Moderator Joseph Weinert, executive vice president of the Spectrum Gaming Group, followed up by asking about the tax rate for online casinos. Online sportsbooks in New York are subject to a 51% tax rate. Addabbo, however, mentioned a number that’s considerably lower.
“I believe it’s 25% with a $2 million license fee,” he said. “I think that’s competitive, not taxed on promotional play. To start with, I think it’s a good bill.”
When addressing the delay, Howard Glaser of Light & Wonder said some may have had irrational expectations:
“I think there’s been some degree of what I’d think of as mass self-delusion in the gaming industry among gaming analysts who tend to talk to each other. Their assumption was, ‘get sports betting, move that along, it’s got more popular support … and then iGaming will follow without having to do a lot.’ Therefore, we as an industry didn’t do a lot.”
Can iGaming actually boost New York casinos?
Much attention focused on the potential impact of NY online casinos on brick-and-mortar facilities. With the ability to play legal casino games from home, some may reason that in-person operations may take a hit.
However, data shown at the panel discussion shows that isn’t the case. The event kicked off with a discussion of New Jersey’s online casino business. While online revenue has increased, brick-and-mortar establishments are reporting no drop-off, on the whole.
“What we’ve seen, time and again, is that iGaming does not cannibalize retail casino revenue,” Weinert said in his opening remarks. “There may be some things that have stunted some growth, but they’ve proven they’re compatible.”
John Pappas of iDEA Growth said operators would be rewarded for pushing sports betting as a gateway to legal, regulated online casinos. In fact, Bill Pascrell III of Princeton Public Affairs Group told PlayNY in June that adding NY online casinos would actually benefit New York sports betting.
“If you have legalized sports betting and you don’t have iGaming, you’ve put your sports industry at a distinct competitive disadvantage with the illegal market. I listen to sports-driven podcasts, and you hear a lot of advertising from offshore sportsbooks. They’re not just talking about sportsbooks. They’re also talking about their digital casinos. The offshore industry recognizes sports betting is an acquisition tool to get people involved with casino.”
The value of online casinos in New York
During the panel discussion, Glaser referenced a study his firm conducted on the potential of iGaming on various states around the country. Assuming 20% tax rates, the study showed online casinos presented $5 billion of possible tax revenue for state governments.
“We did this analysis for every state that currently has land-based gaming,” Glaser explained. “We utilized the existing performance of iGaming states to see how they performed, and we applied that, in effect, to the population of adults in other states.”
He added that a number of states could soon legalize online casinos within the next several years.
“There are likely, I think, over a 36 to 48-month period, there are 10 to 12 states that are likely to advance,” he said. “I have a high confidence level that, during that period, that six or seven of those states would move (to legalization).”