Published: February 21, 2023

New York Gov. Hochul, Sen. Addabbo on Opposite Sides of iGaming, Gambling Revenue Issues

New York Senator Joe Addabbo wants legal online casinos in New York. And he would like state revenue from casino apps to fund public education. Annual tax revenue would top an estimated $475 million through up to 20 casino apps, according to his latest bill. Seven of those apps would be tied to commercial brick-and-mortar casinos – including three to be licensed downstate under budget approval granted last year by Gov. Kathy Hochul. 

But when it comes to iGaming, Addabbo and Hochul don’t appear to be on the same page. Neither do they appear to see eye-to-eye when it comes to where licensing and tax revenue tied to downstate brick-and-mortar casinos should go.

According to Addabbo, that revenue should go to public education. For Hochul, public transportation through the Metropolitan Transportation Authority (MTA) appears to be the priority.

The governor’s 2024 one-year budget proposal would earmark “a share” (without naming specific amounts) of $1.5 billion in licensing fees and between $462-$826 million in annual tax revenue from the three downstate casinos for MTA operations.

None of that revenue would even be budgeted for 2024 (or 2025) under the governor’s current proposal, which states licensing of the three casinos isn’t anticipated “until 2026 or later.” 

And nothing in the 2024 one-year budget proposal appears to mention online casinos. 

That could create a rather interesting dynamic between Hochul and Addabbo as 2024 New York state budget talks ramp up in March. 

Education Funding and the Online Casino Debate in New York

Hochul signed off on licensing for the three downstate casinos when New York finalized its current one-year budget in 2022. Her 2024 one-year budget plan omits any mention of online casino apps. 

Addabbo told Gaming Today in a call on Monday that the omission isn’t necessarily a “no” from Hochul. The Queens Democrat believes there will be room for negotiating when lawmakers start budget meetings with Hochul in March. 

He’s likely to use Hochul’s MTA funding proposal to make his point. 

According to Addabbo, money from commercial casino licensing and revenue in New York is earmarked for education (and to a lesser extent real property tax relief) under a 2013 state law. That law authorized four destination casinos in New York, with leeway to eventually license three more downstate casinos. 

The senator tells Gaming Today that casino licensing and revenue tied to downstate casinos should stay with education, too. At the same time, he says, he is not opposed to using a new revenue stream – namely legal online casinos – to fund services like the MTA, if that’s what Hochul wants. 

“I do not want to siphon off education funds for the MTA. But if the governor wants a more immediate revenue stream for the MTA , I can show her a way to get funding quicker than 2026 – probably by next year – and a more significant revenue stream with iGaming,” Addabbo told Gaming Today on Monday.

“Once you have a new product like iGaming – and that money’s not earmarked for anything – you can use it for social services, for health, you can use it for the MTA.”

New York iGaming Legislation: What Are the Chances?

Addabbo and his legislative colleague, Assemblymember J. Gary Pretlow, have tried to legalize online casinos two years in a row. This year’s Senate proposal, specifically, is S.4856, which would net the state an estimated $625 million in the first year: $475 million in tax revenue and $150 million in one-time license fees from up to 20 potential licensees. The proposed tax rate is 30.5 percent.

For now, almost all of that would go to public education, with few exceptions (including $11 million for gambling addiction treatment).

Potential licensees under Addabbo’s proposal are the state’s casinos, nine mobile sports betting operators, licensed racinos, and three tribal nations.

The three downstate casinos are in the application phase right now. Likely contenders include Resorts World NYC and Empire City in Yonkers. Proposals for Times Square, the East Side, and beyond could also make the list. 

All proposals are expected to be vetted by state regulators in late 2023. 

The 51 Percent: Will NY Lower Its Mobile Sports Betting Rate? 

Mobile sports betting is noticeably absent from Addabbo’s online casino bill, aside from inclusion of mobile operators as potential licensees.

He says his online casino bill is intentionally focused on iGaming. 

“Whether or not new casinos get a mobile license is up to the New York State Gaming Commission,” he told Gaming Today. 

That doesn’t mean that an effort to decrease the state’s 51 percent mobile sports betting tax rate – or its league of nine operators – can’t make it into the 2024 one-year budget. FanDuel and DraftKings told New York state lawmakers in a Jan. 31 hearing that New York’s 51 percent tax rate on mobile sports bets is hurting the state’s gambling industry

Addabbo is responding to calls for a lower rate by filing S.1962. The legislation would tie any reduction in the mobile sports betting tax rate to the number of operators.

Under the proposal, New York would require 14 operators with a corresponding tax rate of 35 percent at a minimum as of Jan. 2024. By 2025, the minimum number of operators would rise to 16 with a corresponding tax rate of 25 percent, per the bill.

FanDuel’s top brass says they welcome the legislation. But Addabbo isn’t sure of the bill’s chances. The challenge, he said, is lowering the rate without losing money for the state — and public education specifically. 

The majority of state revenue from mobile sports betting in New York goes for education.

“I’ve always said somebody has to make a credible argument fiscally for how we take the number-one product in the country and tinker with it,” Addabbo told Gaming Today. “Somebody should make that argument.”

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