If one non-profit has a say, New York could end up with iGaming at some point in the future.
iDEA Growth, the non-profit group in question, comprises a variety of gambling stakeholders. It recently sent a letter of support via the law firm Ifrah Law to New York Senator Joseph Addabbo about New York Senate Bill 8412.
If SB 8412 passes and receives Governor Kathy Hochul’s signature, it would establish legal online casinos in New York. The bill would call for the New York State Gaming Commission to issue licenses and registrations to existing casinos. This would include commercial and tribal casinos, provided the tribes agree to a commercialized mobile wagering agreement.
The bill currently sits in committee and seems like a long shot. However, given the amount of revenue N.Y. mobile sports betting has produced, this could be the best time to strike a legislative deal for online gaming.
What is New York S.B. 8412, and Why Now?
Like many states, New York’s gambling laws have their roots in the horse racing business. The bill would amend the existing “racing, pari-mutuel wagering, and breeding” law to add online gaming.
Questions about the timing might be answered by the success of online gaming in neighboring states. The bill refers to similar efforts in New Jersey, Connecticut, and Pennsylvania. It further notes that Pennsylvania and New Jersey have generated more than $120 million in tax revenue apiece.
Addabbo’s bill also highlights New York’s mobile sports betting success. It predicts that an online casino launch would likewise see New York at the top of the online gambling revenue charts, with hundreds of millions annually for the state.
How Big Would NY Online Casinos Be?
The fiscal implications estimate that New York state could generate $475 million annually in state tax revenue.
This is a huge number. However, given how well sports betting has done for the state, it might be on the conservative side. In addition to the tax revenue, the Bill suggests that the state would rake in a quick $150 million in one-time licensing fees.
More Than Just Kudos
The letter from iDEA Growth to Senator Addabbo went beyond just voicing support for the bill. It also analyzes whether SB 8412 might face any issues under the New York Constitution.
Some may recall that Article I Section 9 of the Constitution caused a lengthy battle over the legality of daily fantasy sports. However, the analysis provided by Ifrah Law concludes, “SB 8412 creates no inherent conflict with New York’s constitutional prohibition on gambling and exceptions thereto.”
The letter begins its analysis by noting New York courts begin an analysis of legislation with the strong presumption that it is constitutional. This is much like the presumption of innocence in criminal law. The argument is that if it receives approval, iGaming would qualify as casino gambling, for which Section 9 carves out an exception.
Potential Problems With Definitions
Many legal battles around gambling focus on definitions. Unfortunately, the N.Y. Constitution doesn’t define “casino gambling.”
This means that the courts will potentially have to fill in the blanks themselves. The casino gambling exception is relatively new, having been added in November 2013. As a result, there is not a lot of case law about a definition.
“Casino gaming,” however, does have a definition in the penal code. The letter argues that “gaming” is a broader term than “gambling.” While “gambling” does have a legal definition in New York, the whole phrase “casino gambling” does not.
The Perennial Question of Mobile Gaming
There is one more issue, one that has come up in different forms in several states.
This is the debate about where an online gambling transaction “takes place” for legal purposes. The letter argues that under New York law, a transaction occurs where it is accepted. In other words, for online betting, that would be where the company servers are located. SB 8412 makes the same assertion.
Some readers may recall that a federal court rejected a similar argument regarding Florida’s mobile sports betting scheme. However, the principles of federalism dictate however that what is true of federal law is not necessarily true of state law. Florida ran into trouble because its plan involved trying to circumvent its own state constitution by way of federal tribal gaming law.
In addition to efforts to define where a bet takes place in the legislation itself, there is some favorable case law supporting that proposition from a 1976 case. (The linked letter contains a typo on the year of the case, but the rest of the citation is correct).
At this time, questions about the constitutionality of S.B. 8412 are of secondary importance. The first and more significant question is whether the bill can get enough support to pass. However, positive opinions on the legality of the proposed endeavor will probably be necessary to convince other legislators it’s feasible. Similar constitutional worries were also an impediment to passing the mobile sports betting bill.
What Are the Odds for Online Gambling Expansion in New York?
A bill is always the starting point for a new law. However, this bill, despite iDEA’s letter of support, is still far from the finish line.
If the sports betting effort is any indication, we’re likely to see a few years pass and many changes made before online gaming expansion happens. However, anything is possible in politics. It is true that the bill’s drafters have the momentum of a hugely lucrative sports betting launch that they can ride on.