Lawmakers in New York’s State Senate and Assembly have approved a budget proposal which would allow the granting of three licences to operate land-based casinos in the downstate area.
This could see operators soon begin a bidding war to obtain the rights to break ground on new casino venues within the limits of New York City.
Late on Friday evening (8 April), New York’s senate passed the budget proposal by an unofficial vote of 38-25, and the assembly later passed it by an unofficial vote of 88-56. The last step in the approval process will see Governor Kathy Hochul sign the budget into law.
In the wake of the pandemic and all of its associated costs, New York State now appears keen to generate as much revenue from the gaming industry as possible – including via downstate land-based casino licensing fees, which will be set at no less than $500m.
Operators will have the opportunity to bid for the licences, in a structure which could see fees climb as high as $1bn – for a licence lasting between 10 and 30 years.
Senator Joseph Addabbo: “While this is a nice step forward for New York State, this does not mean our work is done.”
The tax rate on total GGR from slot machines will be set at no less than 25%, while a GGR tax of at least 10% will be applied to other sources of revenue.
Under the bill, the New York State Gaming Commission will establish a separate, six-member board known as the NY gaming facility location board, in order to determine where approved licensees may begin building new gaming venues.
The board will issue a request for applications within 90 days of a majority of its members being appointed.
Senator Joseph Addabbo, a longtime advocate for New York’s gaming industry, has said he hopes the process of issuing licences can be completed before the end of the year.
Two venues – MGM Resorts’ Empire City Casino at the Yonkers Raceway, and Resorts World Casino New York City in Queens – have a potential advantage over their competitors, having already established their land-based presence in the city offering some casino gaming. If able to secure a licence, the venues would seek to build up to become full-scale casinos.
Top US casino operators including Las Vegas Sands, Bally’s Corporation and Wynn Resorts were reported to have been eyeing New York licences for several years, and the licence application process is expected to be fiercely competitive.
“The inclusion of the downstate casino licences in this year’s budget is a win for New York State and the local communities where these licences will go,” said Addabbo in a statement.
“By allowing three casinos in the downstate region to operate with full licences, it will create thousands of jobs when considering construction and credible post-construction union jobs. It also means additional revenue for the state, estimated at an initial $1.5bn from the three licence fees, and will allow us to significantly fund important educational and gaming addiction programmes.”
The construction of new casino venues following the end of the licensing process could last several years, meaning it will still be some time before customers in New York City can head through the doors of a fully fledged casino.
“While this is a nice step forward for New York State, this does not mean our work is done,” continued Addabbo. “In fact, our work is just beginning.
“Following the budget, the legislature must monitor the timely, fair and transparent bidding process for the licences, and ensure that the siting process is being credibly implemented.
“I look forward to working with my colleagues, the Gaming Commission and the Hochul Administration on the downstate licence issue,” he added.
New York has proven itself to be a highly lucrative gambling market since launching legalised online sports betting in January of this year.
With total revenue between all of the state’s online betting operators since launch now over $329.7m, Flutter Entertainment-owned FanDuel is currently the state’s biggest earner by revenue, having brought in $113.8m from $1.83bn in bets.
Caesars Sportsbook is the second largest revenue earner so far, having generated GGR of $102.7m from $1.25bn in handle, while DraftKings currently comes in third with $84.5m in revenue from $1.22bn in wagers.
Together, these top three operators account for more than 90% of total online sports betting GGR in the state of New York, having also handled more than 90% of the state’s bets since launch.
The remaining handle and revenue is divided between New York’s other approved sports betting operators, including BetMGM and PointsBet.
An amended version of New York State’s mobile sports wagering bill could see the burgeoning market expanded to more than 15 licensees on a reduced GGR tax rate of 25%.
At present, nine operators have been licensed for online betting in New York. Eight have launched operations so far and are taxed at 51% of GGR. FanDuel currently leads the handle market share rankings, as of 27 February 2022.
Current regulations have governed the market since it went live on 8 January 2022, but a new amendment to bill 8471 – sponsored by New York State Assemblyman J. Gary Pretlow – could lead to an influx of new entrants and a more attractive tax rate for participants.
The amended bill permits for no fewer than 14 mobile sports betting operators to be licensed and operational in the state by 31 January 2023, rising to 16 by 31 January 2024.
“In the event that the commission fails to approve the required number of operators by these deadlines, it shall not interfere with the ability of previously licensed platforms or operators from continuing to operate in the state,” the amendment states.
Importantly, the tax rate on GGR will reduce depending on the number of operators licensed to provide services in New York, according to the edited legislation.
The tax rate, which currently stands at 51% for nine licensees, would reduce to 50% for 10-12 operators, 35% for 13-14 operators and 25% for more than 15 operators.
JUST IN: Assemblyman @JGPretlow has filed a bill that would amend New York’s online sports betting law by increasing the # of operators to at least 14 by 1/1/23, and to at least 16 by 1/1/24, and reducing the tax rate on a sliding scale based on the # of operators (15+ = 25%) pic.twitter.com/aYVBg1EOqO
— Daniel Wallach (@WALLACHLEGAL) March 4, 2022
It further states that companies that failed to receive a licence in the initial round, including bet365, Fanatics and Fox Bet among others, would be allowed to reapply for a licence.
The bill allows new applications for mobile sports betting licences to be submitted from 1 September 2022, should the amendment pass senate approval by that date.
The New York State Gaming Commission would further require each platform provider for mobile sports betting to pay a one-time fee of $25m, while each operator authorised for mobile sports betting must pay a fee of $50m within 30 days of commission approval.
The regulator produces weekly data reports on handle and GGR broken down by operator. The amended legislation also permits operators to exclude sports wagers placed using promotions and bonus offers from their overall sports betting gross revenue.
DraftKings CEO Jason Robins was the first to reveal that new legislation was being discussed in New York to lower the current GGR tax rate.
His company is one of several spending millions of dollars on marketing to acquire customers in what has quickly become the biggest regulated betting market in North America.
High marketing spend, combined with the cost of continuing operations and the added 51% tax rate, have led to concerns that New York may never be profitable for betting operators. A reduced tax rate would help to alleviate those concerns in the eyes of investors.
Finally, the amended bill now includes ‘casino’ in its definition of sports wagering gross revenue. In February, a separate bill was filed in New York with the purpose to legalise and regulate online casino and iGaming in the US state for the very first time.
The amended bill, which has now been submitted to the New York Senate Racing, Gaming and Wagering Committee, can be accessed here.