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While the fight for New York’s online sports betting tax rate rages on, another bill has been introduced to legalize iGaming in the Empire State that may help mollify operator frustration.

Sen. Joseph P. Addabbo Jr. introduced bill S4856, which seeks to legalize online casino gaming, including slots, table games, and live dealer games. Poker is not included in the bill (though Assemblyman J. Gary Pretlow introduced a poker bill in late January).

The bill includes a 30.5% iGaming tax rate. Most states average between 15% to 18% for their iGaming tax rates.

“I’ll say with confidence we can do at least $1 billion with iGaming. I think more, but I’ll say conservatively we can do $1 billion annually,” Addabbo Jr. told ESNY.

Sports Betting Operators Hoping for iGaming

The bill would allow all nine current online sports betting license holders to hold an iGaming license.

Recently, DraftKings CEO Jason Robins and FanDuel President Christian Genetski testified at a Senate Standing Committee on Racing, Gaming, and Wagering in favor of lowering the current online sports betting tax rate of 51%.

In their testimony, both Robins and Genetski urged New York lawmakers to legalize iGaming as means to help increase operator revenues and taxes for the state.

In addition to the nine licenses for online sports betting operators, the bill allows New York casinos, racinos, and tribes to hold an iGaming license.

Each license is valid for 10 years and requires a $2 million license fee to hold.

Despite the bill’s introduction, it faces an uphill battle for passage. Gov. Kathy Hochul (D) did not include iGaming provisions or plans in her recent executive budget proposal for Fiscal Year 2024.

In her budget proposal, Hochul suggested using downstate casino license fees and tax revenue, already earmarked for education, to fund the MTA in 2026. Addabbo Jr. said iGaming revenue could be used to fund the MTA much sooner than 2026.

“iGaming will eclipse what we do with mobile sports betting, that revenue, and probably come close to eclipsing downstate licenses,” he said.

The next step? Addabbo plans to hold a roundtable to discuss the bill with New York lawmakers, industry experts, and media members.

Three Additional Licenses up for Grabs

Three additional online iGaming licenses will be available to any operator through a competitive bidding process. This will likely provide an entrance to the New York market for operators who lost out on online sports betting licenses, such as Fanatics or Barstool.

These independent contractors will be able to acquire a license for a $10 million fee if approved to hold one.

The New York State Gaming Commission will regulate iGaming. Like the online sports betting license awards, the gaming commission will accept bids for the three iGaming licenses and award the documents after the competitive bidding process is complete.

An interesting limitation in the bill will prohibit operators who knowingly participate in unregulated or offshore markets from being eligible for a New York iGaming license.

Additionally, if any licensed operator is found to be participating or accepting revenue from unregulated or offshore iGaming markets, the New York State Gaming Commission reserves the right to revoke their awarded license.

Online Sports Betting Tax Rate Fight Continues

While the introduction of the iGaming bill is good news for operators, the fight to reduce New York’s 51% online sports betting tax rate continues.

It’s an untenable tax rate for the state, Robins warned members of the racing, gaming, and wagering committee on Jan. 31.

“The market is built on an unstable foundation, namely a 51% tax rate, which is by far the highest in the country,” he said.

Implementing a lower and more sustainable online sports betting tax rate will shore up New York’s sports betting market and ensure success of its operators.

Addabbo recently introduced a bill to expand New York online sports betting operators to 14 operators by Jan. 31, 2024, and no less than 15 operators by Jan. 31, 2025.

As part of the trade-off to allow for an expansion of online sports betting operators, Addabbo’s bill, S1962, would call for a reduction of the 51% online sports betting tax rate concurrent with the number of expanded operators.

Ten to 12 operators would see an online sports betting tax rate of 50%; 13 to 14 operators a 35% tax rate; and 15 or more operators would see a tax rate of 25%.

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