Opinions on the timeline for the legalisation of iGaming in New York were divided during a discussion at the SBC Summit North America. New York Senator Joseph P. Addabbo Jr. (D-15) and Katie Peters, Public Policy Senior Vice President of FanDuel, expressed optimism that iGaming would be legalised by 2024, while George Rover, Managing Partner of Princeton Global Strategies, and Lee Terfloth, Chief Operating Officer of Out the Gate, were more pessimistic in their predictions, foreseeing a longer road to legalisation.
A Stalled Bill and Potential Revenue
This year, Senator Addabbo Jr. put forward an iGaming bill (S4856), but it didn’t catch on. This bill suggested a 30.5% iGaming tax rate, a notable increase compared to the 15-18% average in most states. Despite Gov. Kathy Hochul (D) leaving iGaming revenues out of her state budget, Addabbo Jr. has expressed his firm intent to make iGaming a priority in 2024. The Senator underscored New York’s potential to rake in $1 billion annually from iGaming, funds that could bolster healthcare or transportation.
Downstate Casino Licenses: An Obstacle for iGaming?
Rover and Terfloth’s cautious predictions might stem from Gov. Hochul’s recent state budget, which prioritised downstate casino licenses. Terfloth remarked, “Political efforts will likely concentrate more on brick-and-mortar casinos. I predict iGaming will take a few more years to implement.” The New York State Gaming Commission plans to award three licenses for downstate casinos using a competitive bidding process. Rover hinted that Aqueduct Racetrack and Yonkers stand a strong chance of securing two of the licenses, leaving just one for a multitude of other proposals.
Learning from New Jersey’s Success
Panelists stressed that adopting an appropriate tax rate is crucial for a thriving iGaming market in New York. Katie Peters, referencing New Jersey’s successful 15% iGaming tax rate, stated, “A low tax rate incentivises investment and encourages more rapid player participation. I’d suggest New York scrutinise New Jersey’s approach closely.”
Key Implications for the iGaming Industry
- Regulatory Complexity: New York’s iGaming regulation discussions demand that businesses navigate a complex legal and regulatory landscape. Successfully passing an iGaming bill could signal changes in the regulatory framework, requiring companies to adapt their strategies and operations accordingly. Proactive monitoring of regulatory changes and agile response will provide a clear advantage in this evolving market.
- Tax Challenges: Senator Addabbo’s proposed 30.5% iGaming tax rate, higher than the average in other states, creates financial challenges for businesses. This tax structure could impact profit margins, pricing of services, and customer acquisition, necessitating a thorough financial assessment to ensure sustainable returns on investment.
- Competitive Landscape: The impending awarding of downstate casino licenses and potential iGaming legalisation indicate an increasingly competitive market. As businesses anticipate an influx of competitors in both traditional casino and iGaming sectors, they must develop robust and distinctive strategies to maintain a competitive edge while exploring synergies between online and physical gaming spaces.