In its first month of operation, New York became the nation’s leading mobile sports betting market, generating over $70m in tax revenue and collecting almost $2bn in wagers. This staggering handle led to around $138m in gross gaming revenue as 1.76 million separate users logged into sports betting apps throughout the state. Undoubtedly, New Yorkers have a taste for gaming, and despite a tax rate that exceeds any of the country’s other states, operators do too.
With this success comes whispers of expanding the Empire State’s offering beyond just that of sports betting and into legalized iGaming, otherwise known as online casinos. This would allow players to play poker, slots and blackjack from the comfort of their own homes. The legalization of iGaming would make New York one of just a select few states with a regulated online casino market, bringing in crucial tax dollars and allowing it to compete with its neighbors who have already embraced the sector.
So, what would a regulated iGaming market in New York look like? What are the challenges it faces? And can we expect to see the state launch in the near future? We spoke with the man who proposed the bill to find out.
The Proposal
A number of politicians throughout the New York Government have voiced support for a legal and regulated iGaming market in the state. The leading proponent, however, is Joseph Addabbo Jr, a State Senator for New York. Addabbo, who also played a key role in the state’s launch of sports betting, has put forth Senate Bill 8412 to the Empire State’s Racing, Gaming and Wagering Committee; and is looking to see the legislation discussed before June.
Bill 8412 proposes a fully regulated, but limited in terms of licensed operators, iGaming market that would allow citizens to play casino games from home. This bill suggests a 25% tax rate for operators, far less than the 51% sportsbooks are currently paying.
“Building upon the success of mobile sports betting in New York, we see that there is an appetite to launch a regulated and safe form of iGaming or online casino using a mobile device,” Addabbo told Gaming America.
“Other states are already doing this very successfully. With the outbreak of the Covid-19 pandemic, we saw a lot more people want to gamble from the comfort of their own homes.”
To gain access to the state’s market, operators would have to go through a similar, and equally rigorous, process as they did when bidding to become one of New York’s nine regulated sportsbooks.
“We don't want a proliferation and over-saturation of the market. It will be very similar to the way that it was done by the state’s Gaming Commission in terms of sports betting, which was very well done,” Addabbo continued.
The Benefits
Addabbo believes that this proposal could bring the state between $475m to $500m a year in tax revenue. This is not a far-fetched number, especially considering the size of the New York market (it is the fourth most populous state in the Union) and the iGaming sector in general. Indeed, according to the American Gaming Association, iGaming grew by 475% in 2020-2021, seeing revenue reach $399.5m in January 2022. Moreover, fueled by the launch of iGaming in one of New York’s closest neighbors, Connecticut, online casino revenue reached $3.7bn in 2021 alone. Impressively, this revenue came from just five states.
There is also the pertinent fact that much of this yearly revenue comes directly from New York’s borders, notably New Jersey and Connecticut. With that in mind, a legalized iGaming market in the Empire State would theoretically both increase state revenue and put the region on equal footing with its closest competitors.
Where will this money go? $500m per annum is a lot of cash, and many in the state would be against all that money being funneled back into the gaming industry. Addabbo argues, however, that almost all of these funds will go towards education, an impressive 90% in fact.
Resolving the state’s problem gambling issue will also be a focus should iGaming be approved. This bill calls for $11m per year to be spent on the prevention of problem gambling, almost double that of what the recently approved sports betting legislation asked for.
Speaking on this, Senator Addabbo told Gaming America: “There is always an addiction issue, problem gambling needs to be at the forefront of the discussion and it is for me. Think about it this way, if we wanted to help a New Yorker who has a problem gambling issue but bets in another state, we can’t. Once iGaming is regulated you can help people who are addicted and are already gambling today."
The Challenges
The benefits are there for all to see; more revenue, increased educational funding and the ability to address problem gambling issues that now go unnoticed, but what challenges will iGaming face before it can go live in New York?
The first is, as with all attempts to pass legislation, timing. Addabbo suggests that this current attempt to pass the law may have come too late to be discussed and approved by June. However, the Senator is confident that by next year, preparations to launch the market will be well under way. “It isn’t a question of if, but when,” Addabbo remarked.
Despite the overwhelming success of sports betting, some in the state’s Government are still resistant to the incoming wave of gaming. This is not surprising, but these dissenting voices are beginning to quiet, as the results of the state’s existing gaming market coalesce with the sheer amount of revenue being made by New York’s neighbors, to create an undeniably compelling argument for iGaming.
Lastly, from an operator’s perspective, there remain some questions over how profitable this market actually is for them. Specifically, if we examine the current numbers out of the region’s sports betting industry, we can see that a number of operators are making impressive strides, notably FanDuel, DraftKings and Caesars Entertainment, while the other six operators have failed to hold more than a 3% market share. Should this remain the case for iGaming, some operators may avoid New York, given the huge advertising budgets needed to break into this highly competitive market. When one examines these facts, the pros and cons, the money available and the people that can benefit from a regulated iGaming market in New York, the coming of online casino ultimately seems inevitable. Indeed, while we may have to wait to see the industry fully realized, New York has been compelled by its neighbors’ undeniably successful iGaming markets to enter the fray.
