Tuesday marked a milestone anniversary in the U.S. gaming industry as the first iGaming app was launched in New Jersey 10 years ago. You’re excused if you did not know since online casinos do not generate the same buzz as their mobile sports betting cousin sites.
While sports betting has mushroomed in the five years since the U.S. Supreme Court’s PASPA ruling, iGaming’s geographic growth has been far slower. Earlier this year, Rhode Island lawmakers passed legislation to make the New England state the eighth to offer online casino gaming. That’s less than a quarter of the states that have approved sports betting in half the time.
The reason for the difference is understandable. Betting always has been ubiquitous with sports, but in recent years, the two have become intertwined, literally, as sports leagues and teams now have partnerships with sportsbooks they once fought to ban across most of the country. Odds used to appear in the scoreboard page of your local newspaper’s sports section. Now, updated odds are shown during television broadcasts of games.
But while sports betting has the buzz, it does not come close to the bucks that iGaming generates, and that may be why New York online casinos might raise the state total to nine.
Despite Deficit, Hochul Says No Tax Raises
Late last month, state budget officials projected New York to face a $4.3 billion deficit for the 2024 budget, which needs to be approved by March 31. The good news is that the forecasted shortfall is less than half what budget officials expected earlier this year. However, $4.3 billion is still substantial, even for a state with a budget likely exceeding $230 billion next year.
One way New York could raise revenue is through tax increases. However, per Gothamist reporter Jon Campbell’s post on X Monday, Hochul told reporters she would not take that step.
“Taxes are high enough in the state of New York, and we have to live within our means,” she said.
That doesn’t mean the state wouldn’t be open to new sources of revenue, and that’s where iGaming comes into play. All New York needs to do is look across the Hudson River.
NY iGaming Could Mean Hundreds of Millions in Taxes
According to data from the New Jersey Division of Gaming Enforcement, the state’s licensed iGaming operators reported $166.8 million in revenue for October. The casinos are expected to generate $1.92 billion in revenue for the year, up from $1.66 billion last year. Last year, online casino revenue more than doubled the $763 million sportsbooks earned in the state. When it comes to taxes, New Jersey rakes in way more from iGaming than it does for sports betting - $249.4 million to $97.9 million, last year.
By comparison, New York’s online sports betting operators reported $1.36 billion in revenue. If you apply New Jersey’s sports betting-to-iGaming revenue ratio to New York, that means New York operators would have generated $2.96 billion in revenue last year if iGaming was legal.
I would not expect New York iGaming to have a 51% tax like online sports betting, but at 30%, that still would have generated more than $887 million in taxes for the state. And that figure does not factor in the amount operators would pay for licenses.
State Sen. Joe Addabbo, D-Queens, has told NYCasinos.com he intends to file a bill to legalize iGaming in New York. Details of that bill are expected to be released sometime next month. Addabbo, who chairs the Senate Committee on Racing, Gaming and Wagering, said iGaming would generate new revenue and new jobs in both the high-tech sector and the creation of studios needing dealers for live online table games.
Many in the gaming industry have been waiting for iGaming’s breakthrough moment, a tipping point where it could open the door to other states considering such an expansion. While New York could be that state, several others also might consider iGaming legislation next year.
Earlier this month, a consulting firm presented a report to Maryland officials about how iGaming could impact the state. One lawmaker, state Sen. Ron Watson, is expected to file a bill to legalize it there next year. Similar efforts are also expected in Iowa and Indiana.
Proponents of online casinos insist iGaming does not harm existing gaming operations and instead creates new jobs and revenue streams for the states. However, for iGaming to pass anywhere, that state’s gaming industry must support the bill. Many lawmakers will be hesitant to pass anything if there are casinos in a state that fear iGaming would cannibalize their land-based or riverboat operations.
That will especially be true in New York, which will likely announce the winners of three land-based casino licenses for the New York City area sometime next year. Those casinos would be expected to open sometime later this decade.
Stay with NYCasinos.com for the latest developments on iGaming in New York and information on what to expect for NY online casino bonuses.
An iGaming Timeline
- November 2013: Online casino apps launch in New Jersey and Delaware (Nevada launched online poker only in April 2013)
- October 2017: Pennsylvania legalizes iGaming
- March 2019: West Virginia legalizes iGaming
- July 2019: Pennsylvania online casino apps launch
- December 2019: Michigan legalizes iGaming
- July 2020: West Virginia online casino apps launch
- January 2021: Michigan online casino apps launch
- May 2021: Connecticut legalizes iGaming
- October 2021: Connecticut online casino apps launch
- June 2023: Rhode Island legalizes iGaming (expected launch date April 2024)