The subject of New York online casino gambling will soon get its own committee hearing, promised state Sen. Joseph P. Addabbo Jr. during today’s joint public hearing on New York sportsbooks.
Addabbo, D-Ozone Park, said so after hearing New York online casino and poker gambling revenue estimates from Spectrum Gaming Capital.
The Horsham, Pa.-based gaming industry financial advisory firm projects a legal New York online casino and poker marketplace would generate $2.3 billion to $3.1 billion in gross gaming revenue (GGR) during its first year of operation. It’d grow to $4 billion during its second year.
That would indeed “eclipse” New York online sports betting revenue, as Addabbo predicted to Bonus earlier. Because Gov. Kathy C. Hochul announced the first year of New York sportsbooks yielded $909 million in tax revenue and license fees.
Every year we don’t do igaming in New York … it’s $4 billion lost.
Bonus finds states that offer iGaming and sports betting see about 70% of revenue arrive from the first form of gambling and 30% in GGR from the second.
Where Is the New York iGaming Bill?
Addabbo has repeatedly told Bonus he’ll introduce an iGaming bill this year. He’s also said he first wanted to gather lawmakers to discuss legislation. Perhaps that’s why Addabbo hasn’t yet proposed a 2023 bill aimed at legalizing online casino and poker gambling in New York.
So far, the chairman of the New York State Senate Standing Committee on Racing, Gaming, and Wagering has sponsored a bill to increase the number of New York online sportsbooks from nine to 16 operators by the 2025 Super Bowl. That proposed legislation would also decrease the state’s 51% tax rate on operators to 25% after there are 15 or more sportsbooks.
Meanwhile, state Assemblyman J. Gary Pretlow, D-Mount Vernon, proposed separate legislation to legalize online poker. Pretlow, chairman of the Assembly’s Standing Committee on Racing and Wagering, has historically backed legal gambling expansion efforts. So he will likely join Addabbo with a companion bill in the Assembly.
However, Addabbo and Pretlow spent the bulk of the workday – from 9:30 a.m. to 1:15 p.m. – in a joint public hearing in which both of their committees heard testimony about how well New York sportsbooks are performing. Jan. 8 was the one-year anniversary of the marketplace launch.
New York Online Casino May Outpace Sports Betting
During today’s four-hour-long meeting about the 1-year-old New York sports betting marketplace, the subjects of online casino and poker gambling were on many minds.
DraftKings CEO Jason Robins testified today that “it’s time to focus on” how iGaming can benefit New York.
He said Michigan generates 6.5 times more revenue in iGaming than sports.
Robins didn’t specify which numbers he was comparing, so Bonus will provide figures from the Michigan Gaming Control Board (MGCB). During 2022, Michigan’s online casino gambling GGR was $1.58 billion. That’s about 4 times as much revenue as online sports betting, which nearly totaled $400 million.
There are 30 sports betting-only states producing half of the revenue that the six iGaming states are collecting, said Howard Glaser. The global head of government affairs and legislative counsel at Light and Wonder (LNW), told lawmakers at today’s hearing that iGaming GGR “far outpaces” sports betting revenue.
Glaser urged the legislators to legalize New York online casino and poker gambling:
Regulate us. Tax us.
New York Sportsbooks Are Taxed Too Much, Operators Say
Addabbo asked Robert Williams, the executive director of the New York State Gaming Commission (NYSGC), about New York sportsbooks’ $909 million in revenue and status as No. 1 in the nation.
Addabbo asked at today’s hearing:
Is this sustainable?
Williams didn’t know, but Robins and FanDuel Group President Christian Genetski said if the current 51% tax rate on sportsbooks continues, it’s unsustainable.
David Isaacson, senior vice president at Spectrum Gaming Capital, testified that a 51% tax rate is more applicable to an operator with a monopoly in a legal sports betting state. New Hampshire and Rhode Island are such states.
The Consequences of the 51% Tax Rate
So Genetski and Robins said the New York sportsbook tax rate is responsible for operators not investing as much in the state’s gamblers as they do per capita in other states.
In fact, we’re now investing 50% less in New York.
The sportsbook operator has the plurality of New York sportsbooks’ market share (40%) but is seeing a “trend line” of betting decreasing 20% since the first three months of operation.
Both said the lessened betting activity is directly tied to operator cost-cutting due to the 51% tax rate and will continue if the rate doesn’t change.
DraftKings (DraftKings 43,53 +0,48%) will provide bettors with “worse odds,” will reduce the value of promotions, and eliminate “meaningful” partnerships with sports franchises and venues, Robins said.
Genetski and Robins said Pennsylvania’s sportsbook tax rate of 36% is more like what New York should adopt for sportsbook growth to resume.
Lawmakers countered that the operators knew the tax rate when they signed up to serve New York.
Assemblywoman Carrie Woerner, D-Round Lake, asked the operators’ leaders about how likely it would be that they could double their user base if New York decreases the sportsbook tax rate.
I have to say, color me skeptical.
Genetski said while Addabbo’s bill is “not ideal,” it would allow New York sportsbooks to resume growth. Because if New York reduces the tax rate, FanDuel will invest more.
Operators investing more will keep bettors interested in the apps and not reverting to crossing state lines to get better deals or switching to illegal betting sites, Robins said.
When we do better, the state does better.