The potential $1 billion licensing fee and 45% tax rate on slots presented in the New York Senate one-house budget have, unsurprisingly, rankled individuals who are hoping to land one of the three coveted downstate NY casino licenses.
Three industry sources — with a vested interest in the Empire State’s legislative process to award those casino licenses — expressed frustration over those massive figures to PlayNY.
Some of the responses include:
“Ridiculous.”
“Doesn’t sound so appealing.”
“Really steep — especially the license fee.”
Lessons from New York sports betting
Gaming market access in NY is extremely valuable, perhaps enough so that interested parties ultimately acquiesce. Or maybe changes will be made during negotiations among legislative leadership heading into the final state budget due April 1.
The state can certainly lean on the early success of online sports betting despite its 51% tax rate. From Jan. 6-March 8, NY sports betting has pulled in $121.2 million in state tax revenue from $3.5 billion in handle.
Still, a state-commissioned study by Spectrum Gaming Group from Jan. 2021 had projected a $500 licensing fee and a 40% tax rate, significantly lower than the one-house Senate budget calls for.
Gov. Kathy Hochul included in her January budget proposal for the fiscal year 2023 authorization of the NYS Gaming Commission to award three downstate casino licenses. The Senate one-house budget included downstate casinos — albeit with tweaked language — while they were rejected outright by the assembly.
Sen. Joe Addabbo is hopeful that downstate casinos will be in the final state budget due April 1.
“I think we’re on our way,” Addabbo said Monday.
If approved, one such plan would enable existing video lottery terminals (VLTs), Resorts World NYC (Queens) and MGM Empire City (Yonkers) to become full-scale casinos. But both entities would still have to emerge from the bidding process and pay all of the licensing fees and taxes (Resorts World NYC would also presumably have to gain the city council’s approval. Their big advantage is speed to market.).
Those for, against downstate casinos
Those in favor of downstate casinos — like Addabbo (Resorts World is in his district) see increased jobs, revenue and educational funding. Those opposed see increased traffic, crime and addiction.
Historically, there has been significant opposition to a casino in Manhattan — and that might not change anytime soon. One former New York bureaucrat who worked in the Mario and Andrew Cuomo administrations believes NYC Mayor Eric Adams could become a key figure in the process of bringing downstate casinos to the city.
Bennett Liebman, now government lawyer in residence at the Government Law Center of Albany Law School, said:
“I think (Mayor Adams) is really the player here. He’s the one person who might have the pull to deal with the issues of casinos in NYC. Having pull with both the legislature and the executive to bring about an agreement.”
At this point in the process, the mayor’s office declined to comment.
“To date, we’ve invested more than $1.1 billion in the property, and we’ll be in position to elevate that support significantly, if provided a full casino license. In fact, we are committed to doubling our workforce in Queens, offering more than 1,000 new union jobs that include the highest wages in the entire casino industry nationwide. We’ll be prepared on day one to make these new hires, generate additional revenue for New York’s public schools and drive an economic boon for local small businesses.”
A spokesperson for MGM politely declined to comment.
NY gaming growing pains
Online sports betting operator expansion made it into the Senate and Assembly one-house budgets. But the language in both suggests that NY might not be willing to lower the 51% tax rate — even with additional operators. That presumably wouldn’t interest the existing NY sportsbook giants (FanDuel, DraftKings) or potential newcomers (Fanatics, Bet365, etc., …).
Online sports betting expansion to include fixed-odds horse racing and NASCAR on the apps didn’t make it either. That also called for betting kiosks at stadiums, arenas, racetracks and OTBs.
As far as kiosks are concerned, sources said there has been talk over constitutionality — whereas legal bets are only currently allowed at the four upstate casinos (or via on-site servers). But sources added that it is an issue that can be resolved.
As far as horse betting, there might be a question of whether the existing advance-deposit wagering platforms (ADWs) like NYRA Bets and TVG and OTBs, would be losers financially if horse wagering was apps, i.e., FanDuel, DraftKings, Caesars and BetMGM. The thought was at least the kiosks would be at the OTBs to offset that potentially.
It’s possible that legislation revisits issues as separate entities.
NY online casino not ‘100% off the table’
Likewise, the passage NY online casino gaming looks like a longshot. It could also be taken up outside of the budget — if not next year.
“Nothing is ever 100% off the table in New York, and that’s kind of the fun but the pain of New York,” one source said. “We’ll have to see.”
