For at least a decade, lawmakers in New York has watched on as neighboring states expanded legal gambling. They witnessed the likes of New Jersey and Pennsylvania green light online sports betting and online casino gaming. They watched as those industries took off, leaving the Empire State in the dust.
But not without effort. Sen. Joe Addabbo and Assemb. Gary Pretlow, among others, consistently brought legislation to the table to help New York keep pace, to keep revenue from exiting the borders to those neighboring states.
Each attempt, though, fell short. Pick a reason — fears of casino cannibalization, concerns over increased problem gambling, etc. — and every proposal was eventually wadded up and thrown in the trash.
Not anymore. This is the year, 2024 that online casinos in NY get the go-ahead. This is the year that New York finally pushes legislation across the finish line. And here’s why.
New Jersey has benefited from New Yorkers for 10 years
Let’s start with a point of emphasis that Addabbo frequently, well, emphasizes.
New Jersey boasts the No. 1 online casino industry in the country. Since launching in 2013, iGaming has generated over $7 billion in total revenue, resulting in more than $1 billion in state tax revenue.
It was New Jersey that broke the mold and created the template not only for online casino gaming but also mobile sports betting. The state was no doubt a catalyst for Addabbo more aggressively pushing for legal expansion to include online sports betting in New York — an industry that is considered No. 1 in the country with over $33 billion in accepted wagers, nearly $3 billion in gross revenue and closing in on $1.5 billion in state tax revenue.
“I was concerned, as we always are, when neighboring states do something that we don’t do,” Addabbo told PlayNY in November. “It usually means a loss of money or a loss of jobs or a missed opportunity. And I hate missing a golden opportunity.”
But it’s not just New Jersey. Neighboring Pennsylvania, which launched online casinos in July 2019, has totaled over $5.4 billion in revenue. Of the other four states with active iGaming, two are nearby in Connecticut and Delaware. On top of that, Rhode Island expects to roll out online casinos in March 2024.
“It really becomes problematic,” Addabbo said in November, referring to other states legalizing online casinos.
“As more states do it and other states like New York get surrounded, you have to do it. I’ve always said in New York, for iGaming, it’s not a question of if but when. It has to happen. How long do you sit back and watch a billion dollars leave the state every year? How much can you take that?”
Previous priorities have been met
Relative to previous legislative eras, New York has made significant progress toward expanded legal gambling. Of course, there was the introduction of online sports betting in January 2022. A few months later, lawmakers approved and began the process of awarding licenses for three downstate casinos in the New York City area.
Between those two landmark events, Pretlow — who, along with Addabbo, was a big proponent and major influence of online gambling expansion — outlined the list of priorities he had in mind before legalizing online casinos.
Those priorities: Ensure that the success of online sports betting in New York, at the time just a days old, could be sustained. Then, downstate casino expansion.
“The best case,” Pretlow told PlayNY in January 2022, “is we get the downstate expansion, and that basically includes online casinos similar to what New Jersey has,” Pretlow said.
As noted, downstate casino licensing has begun; regulators will (hopefully) soon release the second round of answers in the request for applications process, which will be followed by the official application date.
And sports betting? No state holds a candle to it, really. In under two years, NY sports betting has nearly matched or exceeded handle and revenue totals of New Jersey and Nevada since PASPA was repealed in 2018 — and both got four-year head starts.
As Addabbo has assured that the downstate licensing process won’t interfere with potential legalization of NY online casinos, and with sports betting continuing to grow and set records, the two priorities ahead of online casino legalization are now complete.
Next task.
New York faces a massive $4.3 billion deficit
As 2024 enters, so too will a $4.3 billion deficit faced by the state of New York. The Empire State will not have any federal assistance post-COVID, as they have in recent years. And Gov. Kathy Hochul has said she will not raise taxes to help mitigate.
Of course, officials will look for cuts. But as Addabbo told PlayNY: “You cannot — CANNOT — cut your way out of a $4.3 billion deficit.”
So, lawmakers will be in search of alternate sources of revenue. Enter: Online casinos.
“If you want to know which states are going to be next, tell me which states are going to run out of revenue in terms of their annual budgets,” Howard Glaser, head of government affairs and legislative counsel for Light & Wonder, said during October’s Global Gaming Expo in Las Vegas.
“A big piece of what has been a drag on iGaming adoption is the $293 billion that the federal government made in direct payments to states because of COVID. That money made states flush, but that money is starting to run out this coming fiscal year. States that have been cash positive are starting to go cash negative and it gets worse in 2025. Legislators are uncomfortable when they suddenly need to fund a budget hole and then they’ll pull iGaming off the shelf.”
New Jersey, Pennsylvania and Michigan, the country’s three largest online casino markets, generated over $1 billion in revenue during 2022. Recent US Census data showed that New York boasts a population of just under 20 million — more than Michigan (10.1 million) and New Jersey (9.3 million) combined, and ahead of Pennsylvania, the fifth-most populous state with 12.9 million residents.
Estimating how much revenue NY online casinos could generate
Just how much does does New York stand to gain from legal online casinos?
Addabbo told PlayNY that an analyst informed him that New York was was sitting on a billion-dollar industry.
Simple math might suggest more.
Let’s take New Jersey, which saw online casinos generate $1.66 billion in revenue in 2022 while sportsbooks reported some $815.76 million. Essentially, iGaming in the Garden State was 2.03 times greater than sports wagering. Take that figure and multiply it by the 2022 gross gaming revenue from NY sportsbooks, and you (albeit roughly) come to $2.77 billion in revenue from online casinos in New York.
Addabbo’s draft in February 2023, S4856, called for the state to tax gross gaming revenue from online casinos at a 30.5% rate, which means the state of New York would pocket a cool $844.87 million in tax revenue.
Obviously Addabbo and his colleagues want online casinos to be legalized in New York, not only to help make up for the $4.3 billion deficit but to also assist in treating individuals who suffer from problem gambling. The public, too, has indicated they want NY online casinos, as a recent poll from the Parkside Group showed that 51% of New Yorkers were in favor of legalization.
To paraphrase Addabbo, this is the year to do just that. Fortunately, the boom of online sports betting provides a sturdy foundation.
“You build upon success,” Addabbo told PlayNY. “You don’t ignore it. You don’t push it to the side. You build upon success. That’s what we should do with iGaming.”
