The Regulation of Online Gambling in New York State: A Reflective Analysis
The Jackpot Sounds team has been invited to illuminate the complex and evolving online gambling regulation in New York State.
As experts in the gaming industry, we aim to provide a comprehensive overview of the current state of affairs, the challenges faced, and the potential paths forward.
Online gambling, or iGaming, has become a global phenomenon, and New York, with its massive population and economic influence, stands at a critical juncture.
This article explores the regulatory framework, economic implications, social considerations, and the crucial aspect of responsible gambling, weaving in official statistics from U.S. governmental organizations to ground our analysis.
The Current State of Online Gambling in New York
New York has taken significant steps toward embracing online gambling, but the journey remains incomplete. The state has legalized and regulated mobile sports betting, which began in January 2022 under the New York State Gaming Commission (NYSGC).
According to the NYSGC, mobile sports betting generated $1.55 billion in tax revenue by January 2024, underscoring the financial potential of regulated online gambling.
However, online casino gaming—encompassing slots, poker, and table games—remains illegal, leaving New York behind states like New Jersey and Pennsylvania, which have fully embraced iGaming.
Figures like Senator Joseph Addabbo, who has introduced bills to expand online casino gaming, have spearheaded the push for broader legalization. His proposals suggest a framework to issue 31 licenses to operators, including commercial casinos, tribal entities, and online sportsbooks. The proposed tax rate is 30.5%, and licensing fees start at $2 million.
Despite these efforts, Governor Kathy Hochul’s $227 billion FY2024 budget excluded iGaming, signaling resistance or caution at the executive level. This hesitation reflects a broader debate about balancing economic benefits with social risks.
Economic Implications and Lost Opportunities
The economic stakes of online gambling regulation in New York are staggering. A 2023 report from the American Gaming Association (AGA) estimated that Americans wager $510.9 billion annually on illegal and unregulated betting sites, resulting in $13.3 billion in lost tax revenue nationwide.
For New York specifically, a report from the Campaign for Fairer Gambling and Yield Sec found that the state lost $5.35 billion in gross gaming revenue (GGR) to illegal gambling in 2023 alone. Meanwhile, legal mobile sports betting brought in $2.3 billion in tax revenue that year, highlighting a stark contrast between regulated and unregulated markets.
Key Economic Stats
New York’s mobile sports betting tax revenue: $1.55 billion by January 2024 (NYSGC).
National illegal gambling expenditure: $510.9 billion annually (AGA).
New York’s lost GGR to illegal sites in 2023: $5.35 billion (CFG/Yield Sec).
These numbers suggest legalizing online casino gaming could redirect billions from the black market into taxable channels. Neighboring New Jersey, which has regulated sports betting and iGaming, captures 62% of its gambling GGR legally, compared to New York’s 24%.
This disparity has fueled arguments that New York lacks funds to support education, infrastructure, and public health initiatives. Senator Addabbo has emphasized that iGaming revenue could “blow the numbers from sports betting out of the water,” a claim supported by New Jersey’s $526 million in online casino revenue in 2023, per the New Jersey Division of Gaming Enforcement.
The Regulatory Framework: Challenges and Considerations
Regulating online gambling in New York involves navigating a complex web of legal, political, and logistical challenges. The NYSGC, established to oversee all legal gaming activities, has proven capable of managing mobile sports betting, issuing licenses to nine operators since 2022.
However, given the scope of the change, expanding to online casinos would require new legislation, likely through primary laws rather than secondary regulations.
This process is complicated by New York’s historical caution toward gambling, rooted in its 1821 constitutional ban, which was only gradually relaxed over decades.
Opposition to iGaming often centers on fears of increased problem gambling and the influence of offshore operators.
The U.S. Department of Justice, through the 2006 UIGEA, prohibits financial transactions with illegal gambling sites, yet enforcement remains patchy. Offshore casinos, operating beyond U.S. jurisdiction, siphon billions from states like New York, offering no consumer protections or tax contributions.
A robust regulatory framework could mitigate these issues by establishing:
Licensing requirements to ensure operator integrity.
Taxation structures to fund state priorities.
Technological safeguards to block illegal sites and protect players.
Responsible Gambling: A Critical Component
No discussion of online gambling regulation is complete without addressing responsible gambling. The rise of iGaming has raised concerns about addiction, particularly given its accessibility via smartphones and computers.
The New York State Office of Addiction Services and Supports (OASAS), in partnership with the NYSGC and the New York Council on Problem Gambling, formed the Responsible Play Partnership (RPP) to tackle these issues.
The RPP promotes awareness and coordinates treatment services, reflecting a proactive approach to mitigating gambling harm.
Official statistics highlight the scale of the challenge. According to the National Council on Problem Gambling, 2–3% of U.S. adults—roughly 5–8 million people—experience gambling problems annually.
In New York, the OASAS reports that problem gambling helpline calls increased following the legalization of mobile sports betting, though exact figures for 2024 are pending. A 2024 study from the University of California San Diego found that 96% of over 700,000 online gamblers lost money, underscoring the need for protective measures.
Responsible Gambling Initiatives in New York
Self-exclusion programs allowing individuals to ban themselves from all gaming activities.
Mandatory operator contributions to problem gambling funds (Addabbo’s bill proposes $11 million annually).
Educational campaigns on setting time and money limits, supported by the RPP.
Legalization could enhance these efforts by enabling monitoring of player activity, a capability absent in illegal markets.
As Senator Addabbo argues, regulation allows the state to “catch addiction before it hits,” a sentiment the Jackpot Sounds team echoed. “We advocate for integrating advanced data analytics into iGaming platforms to identify at-risk players and offer real-time interventions, a practice already adopted in states like New Jersey.”
The Path Forward: Balancing Opportunity and Responsibility
New York stands at a crossroads. The economic benefits of regulating online gambling are clear, with billions in potential revenue hanging in the balance. Yet, the state must weigh these gains against social costs, particularly the risk of problem gambling.
The Jackpot Sounds experts acknowledge that the best path forward is a legally balanced approach combining strict regulation, robust taxation, and comprehensive responsible gambling measures.
Drawing from official data, the U.S. Census Bureau estimates New York’s population at 19.8 million in 2023, making it one of the largest potential iGaming markets in the country. If legalized, online casinos could mirror New Jersey’s success, where iGaming revenue grew from $482 million in 2022 to $526 million in 2023.
The Bottom Line
Regulating online gambling in New York is not just a financial question but a societal one. The Jackpot Sounds team urges policymakers to consider the full spectrum of impacts—economic, regulatory, and social—while leveraging the state’s existing infrastructure, like the NYSGC and RPP, to create a model that other states could follow.
With the proper framework, New York could transform its gambling landscape, turning lost opportunities into a win for the state and its residents.
