Only just beginning to thrive, the New York online gambling industry has yet to be fully legalized and hit with a massive setback resulting in full legalization set to take place in 2024.
In January 2022, the state of New York welcomed the decision to include online sports betting to the New York State Commission’s approval. Since the approval, the sports betting market in New York has flourished in just over a year, generating over $700 million in federal taxes.
However, as it currently stands, real-money online casinos in New York are not available yet, but many have hopes that they won’t have to wait longer than 2024 to see the legalization of these casinos.
Bettors and gamers were disappointed when they heard that they will have to wait until 2024 for online casinos, as Governor Kathy Hochul’s $227 billion 2024 fiscal year budget doesn’t include the legalization of the iGaming Industry.
Senator Joseph P. Addabbo first introduced bill S4856 at the beginning of 2023 in hopes of legalizing an iGaming tax rate of 30.5% and New York online casinos. However, it was not passed due to insufficient financial budget support.
Governor Kathy Hochul’s budget roadblocks New York iGamming Industry
The decision to suspend the passing of bill S4856 came after New York’s Assembly and Senate chambers omitted the bill from the 2024 fiscal year budgets. Both chambers typically publish bipartisan budgets and compromise as part of the final negotiating process for the upcoming financial year, with New York’s financial year starting on the 1st of April, 2023.
The absence of additional budget provisions related to the igaming industry completes the trifecta of non-interest budget releases, as the industry was left out of Gov. Hochul’s fiscal year for the 2024 budget release.
Without budgetary support, the online gambling industry and its subsections like online poker have suffered, with the legalization delayed until 2024. New York Assemblyman Gary Pretlow introduced bill AB1380 a month before State Senator Joseph Addabbo’s S4856 bill. If supported with the proper financial backing, both of these bills would have legalized online poker and other games by classifying the games as a game of skill. These bills follow the same tactic used to legalize daily fantasy sports.
New York’s Bill to Legalize the iGaming Industry
Senate Bill S4856, proposed by Sen. Addabbo, seeks to amend New York’s pari-mutuel wagering, breeding, and racing law by implementing a new section – article 15 – that offers the regulation of the igaming industry within New York.
The new changes would legislate for online table games, slots, and live dealer games to be legal within the state.
Once passed, the bill will see four different gaming entities that would qualify to receive an igaming license. The entities are racetracks, Indian tribes that have entered into gaming compacts, destination resort casinos, and operators with existing online sports betting licenses.
The bill will allow for three additional interactive gaming licenses to be issued. These licenses would be conditioned licensees who are members of a minority group partly or wholly owned. In addition, each minority group licensee would be limited in entering an agreement that offers interactive gaming services to one platform provider.
Bill S4856 details that an initial licensing fee of $2 million will be required for the application for a license and would rise to $10 million if the qualified licensee aims to brand an existing platform provider. In addition, these licenses will only be valid for ten years from issue.
The bill adds measures to add industry sustainability. The New Your State Gaming Commission (NYSGC) is not allowed to license entities or their associated organizations known for conducting illegal gambling in illegal markets.
The bill also proposes implementing a tax of 30.5%on all gross gaming revenue (GGR); the taxes are to be deposited into New York’s state lottery fund for educational aid. In addition, the bill states that New York state would also distribute $11 million from the fund every year to be used for gaming treatment and education purposes.
If Bill S4856 passes, New York would be one of seven United States states to legalize online gambling.
New York’s iGaming Industry
New York’s casinos are expected to reach record-breaking highs in 2023 as the current state-wide gambling boom fuels the industry. A few factors, including increased access, have driven the gambling boom to affordable mobile devices with access to online casinos, relaxed regulations on casino operations, and an increased public interest in the industry.
Thanks to these factors, the empire states’ casinos are expected to see record-breaking revenue levels over the next couple of years, increasing job creation and additional funding of local economies throughout New York.
What New York is currently losing
If New York were to legalize igaming, it would join six other states – Connecticut, New Jersey, West Virginia, Delaware, Nevada (online poker only), and Pennsylvania. The combined tax revenue from the six states in 2021 was $970 million.
A report commissioned in 2022 by Light and Wonder, a digital gaming company based in Las Vegas, mentioned that by refusing to legalize igaming and online casino games like Blackjack and Roulette in New York, the state is losing an estimated $400 million in annual tax revenue.
Another report by VIXIO GamblingCompliance went on to back the report by Light and Wonder, stating that New York could be generating $428 million in 2023 if Gov. Kathey Hocul and the state legislature approved any bill permitting “iGaming” casino-style games and other online casino sites available in New York 2023.
How New York Casinos are Preparing for Record Revenue in 2023
In January, the state of New York reported its gross gaming revenue was $149.4 million. The state’s gaming industry expects to receive more than $2 billion in revenue over the next 11 months.
Casino operations have heavily invested in new infrastructure and technology upgrades to benefit from the increased interest in the industry, with larger casino groups offering customers VR experiences and online gaming options. All of the investments made within the industry will help the casinos in New York maximize their profits by the end of 2023.
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