For years, Sen. Joe Addabbo and his colleagues have attempted to continue legal gambling expansion in New York.
It was only two years ago that online sports betting finally made its debut in the Empire State, leading to over $1.5 billion in state tax revenue. Downstate casino licensing is underway, potentially creating a gaming industry that rivals Las Vegas.
Now, once again, Addabbo looks to push the state into iGaming territory with a bill to legalize online casinos in New York, internet lottery and online poker in NY.
While, at least initially, it doesn’t appear that Gov. Kathy Hochul will support such legislation, several details within Addabbo’s proposal require additional attention.
Because – in the face of hurdles and with New York staring down a $4.3 billion deficit and with the unprecedented success of online sports betting – these details could help Addabbo’s bill draw enough support for passage in 2024.
Up to 31 online casino skins on the table
Certainly Addabbo did not expect Hochul to include his interactive gaming bill in her Executive Budget when he filed a legislation proposal late last week. (Obviously that was the goal. But as Addabbo told PlayNY, his bill and the executive budget are not end-all-be-alls, but rather starting points for conversation.)
Should Hochul and other lawmakers come around and include New York online casino gaming in the final budget via the proposed S8185, by the time the industry launches, it could potentially boast up to 31 operators.
While that casts a wide net and creates a competitive market, the bill essentially supports its own. All but three of those “skins” are carved out for in-state businesses:
- Four upstate casinos
- Three incoming downstate casinos
- Three tribal casinos
- Nine online NY sportsbooks
- Nine VLT racinos
The other three licenses will go up for bid by outside entities. All of this to say: If legalized, the New York online casino industry – if completely full – will feature the most operators in the country. Why does that matter?
New York stands to gain a lot from legalization
Consider neighboring New Jersey, which currently boasts the highest number of online casinos and sportsbooks in the United States.
Alive since 2013, the New Jersey online casino market has generated nearly $1.1 billion in state tax revenue. For perspective, some 29 online casinos operate in New Jersey, compared with the 31 proposed by Addabbo’s bill.
The Garden State also imposes a 15% tax on revenue. In the New York proposal, the state would levee a 30.5% tax. Just as a thought experiment, let’s put all these numbers into action.
First, start with those 31 licenses. Addabbo’s bill calls for 28 of those skins – the in-state licenses – to cost $2 million each. The other three will go for $10 million. Without even launching, just by awarding those licenses, New York would pocket a cool $86 million.
Then consider the 30.5% tax rate, using the amount of gross revenue generated by New Jersey online casinos. In 2023, online casino operators in NJ combined for a record-setting $1.9 billion in revenue, leading to $288.5 million in state tax revenue. With a 30.5% rate, that revenue total comes out to over $586 million for the state.
Obviously, with higher population levels and a growing hunger for expanded online gambling, New York should generate much more than that. Based off information from an analysit, Addabbo said the Empire State is sitting on a billion dollars.
How bill includes union workers in New York
One of the biggest hurdles to clear – if not the largest – surrounds the union for hotel and gaming workers in New York. The New York Hotel and Gaming Trades Council (NYHTC) appears to oppose Addabbo’s legislation to legalize online casinos in New York.
Mainly because of a fear that online gambling would cannibalize land-based properties. Online casinos, the reasoning goes, would create an entertainment option that folks can obtain from the comfort of their own homes. They wouldn’t feel the need to travel to brick-and-mortars and enjoy the in-person experiences offered at casinos/resorts upstate and, eventually, around the New York City area.
Which is why Addabbo included a section directly addressing how NY online casinos can support the union.
His proposal calls for the state to funnel a minimum of $25 million a year toward the NYHTC. The bill’s language spells out how that money will fund employee and responsible gaming training and education as well as health and development.
Secondly, the bill directs a minimum of $25 million a year to a fund that the New York Hotel & Gaming Trades Council can use to ensure that online casino is not negatively affecting employees of brick-and-mortar facilities. Bill language indicates the money goes toward employee training, responsible gaming training and education, health and development.
In addition, integrating online casinos in New York would also create jobs. All servers and related tech for online casino gaming must be located on the premises of land-based operators. That does not include live dealer studios, which only need to be located within New York state lines.
In order to open such a studio, according to the bill, “applicants must produce documentation that it has entered into a labor peace agreement with each labor organization that is actively engaged in representing and attempting to represent gaming and hospitality industry workers in the state.”
Basically: If you want to offer online casino gaming in New York, interested operators must include and hire in-state employees.
