Online casino gaming still isn’t legal in New York. Yet, neighboring states New Jersey and Pennsylvania are two of the most established internet gaming markets in the US.
The close proximity of those states leaves many scratching their heads, asking why legislation legalizing NY online casinos hasn’t been passed. If it happened in Jersey and Pennsylvania, why can’t it get over the hump in the Empire State?
In reality, comparing New York’s situation to New Jersey and Pennsylvania is apples to oranges. To understand why, let’s review why those states legalized online casinos in the first place.
Great Recession made NJ desperate for new form of tax revenue
In 2004, Pennsylvania opened land-based casinos to rival Atlantic City. The PA casino industry never matched AC, but it was successful in taking foot traffic away from south Jersey casinos. With less money being made, Atlantic City operators opted to let employees go as a cost-cutting measure.
Then, the Great Recession hit from 2007 to 2009, and things got even more dire in New Jersey. Atlantic City provided the state with massive amounts of annual tax revenue, but that source of cash quickly dried up as fewer patrons had extra money to gamble at casinos.
This led to even more casino employees being fired, which only made the Atlantic City experience inferior to what it once offered. As the problem continued snowballing, home foreclosures in AC and neighboring areas skyrocketed.
Policymakers began talks of regulating online casino gaming in 2007, thinking that if it was tethered to NJ’s retail casinos, it could bring in some much-needed tax revenue and help Atlantic City. But at that time, the internet was a foreign concept to many, and adding casino gaming to the mix made things even more confusing.
Finally in 2013, then-Gov. Chris Christie legalized online casino gaming, and it took some time, but eventually gained traction among bettors. Online poker was particularly popular, and it drew a lot of patrons back to the poker rooms in Atlantic City.
Since then, online casinos continue to be a strong source of revenue for the Garden State. Online casino operators have combined to make nearly $5.8 billion in total revenue, while New Jersey has received over $1 billion in taxes.
Budget deficit in Pennsylvania motivated online casino legalization
When NJ regulated online casinos in 2013, Pennsylvania lawmakers immediately attempted to follow suit. The first piece of legislation bringing it to Pennsylvania came that same year, but ultimately fell short of passage.
In total, seven bills calling for mobile casino games were presented in PA and none were successful. It wasn’t until the Keystone State was faced with a budget deficit, which was partially caused by underperforming casinos, that lawmakers decided it was time for a new stream of revenue.
In 2017, then-Gov. Tom Wolf signed an online gambling expansion bill into law. This was a huge deal, as PA became just the fourth state to provide clearance for online gambling.
Despite passage in 2017, online wagering didn’t launch until 2019. Its popularity grew much faster than New Jersey’s, surprising many working in the industry.
While Jersey got a competitive advantage over Pennsylvania by launching first, PA did reap the benefits of learning from its neighbor’s regulatory structure. For starters, PA implemented a 54% online casino tax rate, providing more tax revenue to supplement the budget deficit. New Jersey’s tax rate was just 15%.
Some operators that were active in NJ received licensing in Pennsylvania. Their years of experience in Jersey prepared them for a launch in a new state.
Since being introduced in 2019, Pennsylvania online casinos have made more than $4.2 billion in total revenue. The state has earned north of $1.2 billion in tax revenue.
New York lacks compelling reason to legalize online casinos
In New Jersey, they needed revenue following the Great Recession. In Pennsylvania, they were faced with a budget deficit.
New York, too, will likely need similar reasoning before online gaming expansion can take place.
If you think the Metropolitan Transportation Authority’s (MTA) financial struggles fit the description, it doesn’t. That problem solely impacts New York City, so lawmakers in the rest of the state have no motivation to bail out the Big Apple.
Despite that, Sen. Joe Addabbo, a driving force behind each failed attempt at legalization in recent years, will likely center his platform to legalize online casinos around MTA funding. But that issue simply isn’t widespread across the Empire State.
Is a financial disaster really necessary to legalize NY online casinos?
It makes a lot of sense to legalize NY online casinos before financial disaster strikes. But unfortunately, that’s New York’s best shot at getting mobile casino games.
The biggest reason for this is the general demographic of state legislatures. West Virginia Del. Shawn Fluharty pointed this out during a recent online gaming panel held in Atlantic City.
Fluharty believes a majority of policymakers are older and more conservative. These descriptors don’t lend themselves to new-age ideas like legalizing online casinos.
It’s also difficult having mobile wagering discussions with people who simply don’t understand the concept, or the financial impact they could have. Online casino tax revenue is booming in New Jersey and Pennsylvania, and it’s only becoming more popular among bettors.