The New York Attorney General's Office banned more than two dozen sweepstakes casinos last week, another positive sign for those waiting for online casinos to arrive in the state.
The New York State Gaming Commission and Attorney General Letitia James sent cease-and-desist orders to platforms they found to be offering online slot machines, table games, and sports betting services. None of the sweepstakes casino sites were licensed, meaning they didn’t have to pay state taxes and didn’t have to guarantee basic consumer protection standards.
As the state prepares to award three retail casino licenses later this year and maintains its nation-leading sports betting market, attention has naturally turned to its future in iGaming.
Cleaning up the market
James confirmed that 26 sweepstakes platforms were ordered to shutter.
“Online sweepstakes casinos are illegal, dangerous, and can seriously ruin people’s finances. I thank the New York State Gaming Commission and Sen. [Joseph] Addabbo for partnering with my office on this issue to protect New Yorkers.”
The key word in that statement is “illegal.” New York imposes a 51% tax rate on sports betting revenue, among the highest mark in the country, and stands to gain billions when it launches three new brick-and-mortar casinos over the coming years.
Currently, casino games in New York are taxed at different rates: slots are taxed from 37% to 45% depending on location, and table games and poker are taxed at 10%.
Illegal operators do not contribute any tax revenue to the state, which makes sweepstakes platforms an easy target for regulators.
The idea of New York online casinos coming to fruition was also confirmed by gaming giant Las Vegas Sands.
The company, which had partnered with Nassau County to apply for a casino operator’s license at the Nassau Coliseum, cited threats in competition should the state legalize iGaming as a leading reason it exited its arrangement in April.
Retail casino license fees cost $500 million upfront. Sports betting license applications cost $25 million initially and $2.5 million annually.
Will gaming expansion continue?
Sen. Joseph Addabbo Jr. (D-15) has been an outspoken proponent of legalizing online casinos and banning sweepstakes operators. He proposed Senate Bill 5935 in the spring, and after an amendment was added, the bill was forwarded for a full Senate vote (which still awaits).
Addabbo issued a statement warning of the dangers of sweepstakes casinos after the ban was announced last week.
“At a time when illegal gambling, underage participation, and identity theft are soaring, it is deeply concerning that prohibited, unregulated, and unenforceable gambling entities are providing easy access to illegal gaming sites and obtaining personal information of unsuspecting New Yorkers.”
Addabbo introduced Senate Bill 2614 in January. It would allow one skin per license and contained details regarding promotional deductions, plans for responsible gambling, and self-exclusions.
Currently, only seven states, mostly located in the northeast US, allow online casinos.
While it's easy to imagine that New York online casinos would generate tons of revenue and tax funding, officials also need to consider the impact iGaming would have on retail casinos.
Notably, New York Gov. Kathy Hochul helped get legal sports betting over the finish line and was responsible for creating the three new retail casino licenses.