New York Online Casinos Supported by Lawmakers in Open Letter

Article ByDavid Weir

December 8, 2023

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Posted in: US Gambling News, New York Gambling News, US Casino News

A pair of influential New York lawmakers at the state capitol (pictured) have this week penned an open letter in support of legalizing online casinos in New York.

State Senator Joseph Addabbo and Assemblyman J. Gary Pretlow wrote an op-ed for City & State New York in which they outlined the reasons they want online casinos in the Empire State.

Their main argument rests on the hefty state budget deficit expected for 2024, which the state comptroller has predicted as potentially $4.3 billion in the red. The pair want online casino taxes to fill some of this gap, as the market has the potential to outstrip the proven success of New York sports betting, which has already paid over $1 billion to the state in taxes since legalizing.

“We are working on legislation to authorize iGaming and iLottery in New York, and we are optimistic that this session, we can turn it into law,” Addabbo and Pretlow wrote in the letter.

“The bill uses the same framework in place for mobile sports betting, allowing consumers to safely play in a legal and regulated market while generating a projected $1 billion annually for New York, above and beyond what the state already receives from mobile sports betting.”

Addressing Deficits Through Casino Taxes

New York’s budget deficit, projected to exceed $9 billion in 2025, presents a formidable challenge. Addabbo and Pretlow argue that legalizing online casinos and lottery gaming could effectively double the revenue already generated from online sports betting, thereby significantly mitigating the shortfall.

This proposal comes at a critical juncture, with COVID-era funding from the federal government expiring.

“At a time of fiscal distress for our state, we cannot continue to allow hundreds of millions of dollars to be funneled into neighboring states or into the pockets of disreputable companies – particularly when those funds could be used to further bolster funding for public schools or other worthy services,” the lawmakers wrote.

Online casinos in New Jersey, the biggest currently legal iGaming market, saw operators generate a gross gaming revenue of $1.66 billion in 2022, on which they paid $250 million in taxes. That far surpassed New Jersey sports betting revenues on both metrics over the same period.

On the other hand, New York’s online sportsbooks recently had a record October for handle, receiving slightly more than $2 billion in total wagers. That resulted in $84.8 million in taxes for the state out of $688 million in revenue so far this year.

If online casinos can outpace sports betting at the same rate as in neighboring New Jersey, then the total yearly tax take could easily hit the $1 billion projected by Addabbo and Pretlow.

A New York online lottery could also contribute, as they are usually more involved with the state and have a higher tax rate. Lottery courier services like Jackpot.com already operate in New York anyway, offering people proxy online lottery services. So if it was fully legalized, the state would then be getting a slice of that pie.

Ensuring Balance but Changes Needed

The two New York lawmakers also preemptively countered one of the usual criticisms of introducing online casinos – that they will cannibalize revenue from existing land-based casinos in states that legalize.

“All reports indicate that these states are seeing a net increase in tax revenue from these activities, with no detrimental effects on brick-and-mortar businesses, such as casinos and convenience stores that sell lottery tickets,” they wrote.

On that front, the limited amount of studies do generally support that revenues in states with online and land-based casinos generally rise together.

However, some studies do contradict that, such as a recent study by Indiana’s Office of Fiscal and Management Analysis.

“Studies have concluded that up to 30% of new online gaming revenues are displaced from existing casino revenues. This figure could be higher for a saturated market like Indiana,” the office said in a review that helped sink a 2023 bill aiming for online casinos in Indiana.

The impact of online casinos on physical casino workforces should also be considered. Although market revenue and taxes may rise, some operators may cut back on their physical presence at a time when U.S. casino workers’ unions have been increasingly active.

All New for New York

Regardless of the outcome of the online casino debate, the Empire State stands at the precipice of a significant change in its gambling landscape in several other ways going into 2024.

Governor Kathy Hochul is in tense negotiations with the Seneca Nation regarding their soon-to-expire Tribal gaming compact, which was recently given a temporary extension until March 2024.

There are also dozens of giant casino operators and billionaire investors racing for three upcoming licenses to develop downstate New York casinos. Big-name competitors include MGM International, Caesars Entertainment and Jay-Z, New York Mets owner Steve Cohen and Hard Rock, and Las Vegas Sands with a planned casino in Long Island.