Communicated Content- New York state’s position on the internet gambling has looked increasingly outdated over the past 2 years. Whereas 5 states now allow both online casino and sports betting – and another 8 states have legalized sports betting alone – New York’s position is far more complex.
There are of course Daily Fantasy Sports (DFS) real money websites which continue to benefit from the carve-out in the UIGEA bill, which became law in 2006. New Yorkers can also bet on horse races via the TVG cable network. However, both casino and regular sports betting fans must travel to the northern half of the state to gamble on games like slots, roulette, and even bet on sports events like the NFL and NBA.
For residents of NYC, a trip to the gambling mecca of Atlantic City is shorter than it would be too many of New York state’s very own brick and mortar casinos. Right now, it’s a no-brainer for New Yorkers to make the trip across state lines to place their bets physically, or even to place them online, given that nearby NJ and PA states have legalized both the online casino and online sports betting verticals.
We have heard stories of Staten Island residents pointing their mobile devices over the Arthur Kill towards Middlesex County, in order to fool their mobile data provider into thinking they are located in NJ. And while these stories are most likely urban legends, it’s clear that New York’s ban on online gambling is resulting in a loss of potential tax revenue.
In these tough COVID times, that issue is particularly felt by those in charge of state revenue. And that probably explains why ex-Governor Cuomo changed his mind about legalizing online gambling towards the end of his tenure. In April of this year, Cuomo signaled that lawmakers are ready to pass a bill making both online casino and online sports betting legal in the near future. The projected $500 million annual boosts to state tax revenues were the main driving factor behind this change of tune, and everything seemed set for a legalization date around late 2021 or early 2022.
Cuomo’s resignation last month seems to have put NY online gambling legislation on the back burner, however. It is not yet clear what position new Governor Kathy Hochel takes on the issue of online gambling – or how far up her list of priorities the issue is situated. It is also unclear whether the proposed bill will only encompass sports betting, or if online casino gambling will also be included from the get-go.
While six bids have already been provisionally submitted for the 2 available licenses, all 6 come from sportsbook-focused operators, who are no doubt hoping that sports betting will get the green light before Super Bowl LVI, which takes place on Sunday, Feb 13. Given the lack of time remaining before now and the end of the year, these operators will no doubt be focusing the minds of lawmakers on sports, rather than casinos. However, experience from other states where both sports betting and online casino gaming are legal shows that the gaming vertical produces steadier, more predictable, and less seasonal revenue.
The only remaining question is how legal online casino gambling in New York will affect the revenue streams of those land-based casinos situated in the north of the state. West Virginia protected the interests of their own brick-and-mortar venues by letting them receive some of the online casino revenue streams (indeed, it is these casinos that allow online providers to use their permitted ‘skins’. That could be one potential solution to New York’s online gambling conundrum.
But with COVID still exerting pressure on New York’s tax base, and clear demand for online gambling by the state’s residents, it’s hard to see how this niche won’t get the green light from the state’s lawmakers at some point in 2022.