NY Online Casinos Won’t Cannibalize Brick-And-Mortar

New York mobile sports betting is delivering like a boss. The state’s online sportsbooks exceeded $10.6 billion in total handle during their first eight months of operation starting in January. That’s nearly $1 billion more than rival New Jersey reported in mobile handle for all of 2021.

Keep in mind that New Jersey has 21 mobile sportsbooks. New York has nine.

It’s that kind of prowess that gives New York State Senator and Senate Racing, Gaming and Wagering chair Joe Addabbo Jr, D-Queens, a lot of confidence in the growth potential of New York online gaming — this time in the online casino arena.

On Tuesday, Addabbo told NY Sports Day he plans to work with fellow lawmakers and Gov. Kathy Hochul in 2023 to ramp up online betting options, with an emphasis on NY online casinos. That could mean more mobile choices by 2024, if not before.

“The potential for revenue under iGaming is far greater than that of mobile sports betting,” Addabbo said, acknowledging online casino revenue tends to outpace mobile sports betting revenue by more than 2 to 1, per some estimates. “I’d love to have that conversation about having iGaming put in the executive budget or part of the budget process early next year.”

Addabbo: Downstate Casino Licensing Took Precedence This Year

The Senate gaming chair sponsored online casino legislation in 2022 but backed off as budget talks turned to the licensing of three downstate commercial casinos authorized under existing law.

The three downstate casinos are among seven commercial casinos allowed under the state constitution. The remaining four casinos are located upstate and have been up and running for years. Those four casinos are home to New York’s mobile sports betting servers, which average about $1 billion in handle each month among the state’s nine licensed mobile sportsbook operators.

Once a brick-and-mortar casino is licensed — hopefully by the first quarter of 2023, Addabbo said — the casino can get construction out of the way and set an opening date. That date is most likely to be in 2024 but could come earlier depending on the licensee, according to Addabbo.

Additionally, the Senator said he doesn’t expect one opening date for all three casinos, although all details haven’t yet been worked out.

Online Casinos Will Be Tethered To NY Commercial Casinos

Online casino apps and any additional mobile sportsbooks in New York would be tied to the state’s commercial casinos, as mobile sportsbooks are now.

It’s a state constitutional requirement. Per Section 9 of Article 1 of the New York State Constitution: “Casino Gambling at no more than seven facilities as authorized and prescribed by the Legislature shall hereafter be authorized or allowed within this state.” Those seven facilities are the seven commercial casinos written into state law.

Mobile sports bets placed anywhere in New York through betting servers at the state’s commercial casinos are considered to have been placed at the casinos to meet the requirement. The same would be true of online casino betting, it should be legalized.

Addabbo’s 2022 online casino proposal would have authorized up to 14 online casinos — or two apps for each of seven commercial casinos authorized under New York law. He expects to file a similar proposal in 2023, the Senator told NY Sports Day.

It is unclear if upstate casinos that already have mobile sports betting servers would be allowed to add more sportsbook operators later on. Details on that, and other issues, would need to be worked out by state lawmakers and Gov. Hochul in the 2023 legislative session if anything is expected to change by 2024.

Online Casino, More Mobile Sportsbooks Hinges On Downstate Casinos

Right now, any chance of online casinos or more mobile sportsbooks coming to New York almost certainly hinges on getting the downstate casinos up and running. The sooner the casinos are licensed, the sooner they can begin operations.

Addabbo mentioned Resorts World Casino NYC in Queens and MGM Empire City in Yonkers as two potential applicants that he believes can get operations underway quickly if they are licensed next year. Resorts World and MGM both now operate video lottery terminals at their current downstate facilities. They would be allowed to offer more casino-style games plus sports betting with a full-scale casino license.

Online casinos could eventually come their way, too.

“Certainly they’ve earned it, in my opinion,” Addabbo said. “They’re good neighbors and they’ve been very successful. But there’s nothing for granted here. They have to go through the bidding process just like everyone else.”

If two of the licenses are eventually awarded to locals, that would still leave a third up for grabs. Both the Las Vegas Sands casino and Rush Street Interactive, which operates one of New York’s four upstate commercial casinos under the BetRivers brand, have expressed interest so far, according to an Aug. 20 article in the Albany Times Union.

Online Casino, More Sportsbooks Would Supplement Brick-And-Mortar Revenue

Online casinos would definitely be a moneymaker for New York. A tax rate of at least 25% is expected under Addabbo’s 2022 proposal, with licensing fees alone bringing in at least $150 million in the first year. Tax revenue could total as much as $500 million annually, according to the bill.

Also benefiting would be the casinos themselves. Online casinos would only add to their handle, not subtract from it.

“That is why the first incarnation of iGaming includes brick-and-mortar-only first to get the license,” Addabbo said “This is not to cannibalize the brick-and-mortar. This is helpful.”

It remains to be seen, however, how many casino apps the legislature and Gov. Hochul are willing to allow, at least on the first go-around. The threshold for mobile sportsbooks was set at a minimum of two platform providers and four operators by state lawmakers in 2021. The New York State Gaming Commission, which handled the mobile sports betting selection process, settled on nine operators.

Under his 2022 online casino bill, Addabbo proposed up to two online apps for each commercial casino in the state. That would amount to 14 apps, should all seven casinos apply for an online casino license. But all that is subject to change after discussions get underway next year.

Addabbo says he would personally like to see online casinos up and running by 2024 if lawmakers and Gov. Hochul can reach an agreement on the issue in 2023.

he told NY Sports Day that he thinks an agreement is a real possibility, given the competitiveness of the New York gambling market.

“We have to go into the next session, in my opinion, talking about what do we do here?” he said. “Do we increase the number of operators (for mobile sports betting)? Do we look at the product itself – whatever it may be to make it a better product for the people of New York.”

Right now, online casino games are legal in seven states including New Jersey and Pennsylvania. Michigan, Connecticut, Delaware, and West Virginia also have legal online casino games, although Nevada limits its offering to online poker.

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