Two years ago, New York embarked on a groundbreaking journey in the online sports betting market. FanDuel was the first platform to receive approval and has been operational in NY since January 8, 2022.
This launch marked a significant milestone after the state legalized online and mobile sports wagering in April 2021. Today, New York is a major hub in the online betting industry, yet there is still much to explore.
In this article, we’ll examine the impacts of legalizing sports betting and what the future may hold for this thriving market.
Sports Betting in the United States – How Does It Work?
The legality of online sports betting in the U.S. varies from state to state. Each state is free to establish its own regulatory framework for licensing online gambling platforms, overseeing operations, and taxing gambling revenues.
As of 2024, more than 30 states have legalized some form of online sports betting. Leading states in this area include New Jersey, Pennsylvania, and Michigan. It’s worth noting that some states allow sports betting while limiting casino gaming.
The Professional and Amateur Sports Protection Act (PASPA)
For decades, sports betting in the United States operated largely in the shadows, hampered by the Professional and Amateur Sports Protection Act (PASPA) of 1992. PASPA effectively prohibited states from authorizing, sponsoring, operating, advertising, or promoting sports betting, with exceptions for a few states, including Nevada, which already allowed legal sports betting.
In May 2018, the Supreme Court issued a landmark decision overturning PASPA. The Court ruled that PASPA violated the Tenth Amendment, which protects states’ rights against federal overreach, by preventing states from regulating sports betting.
This decision paved the way for states to regulate sports betting within their borders. The first state to regulate its local online gambling industry was New Jersey. Online sports betting went live in this state on August 1, 2018, only a few months after PASPA was overturned.
Is Gambling Legal in New York? – Everything You Should Know
Unlike New Jersey, New York’s approach to online sports betting was more cautious. Former Governor Andrew Cuomo, who handled the situation, consistently expressed skepticism, frequently downplaying the potential revenue as insignificant compared to New York’s overall budget.
He often referred to the revenue generated by New Jersey as a “rounding error” in New York’s budget.
How Did Sports Betting Become Legal in New York
A few years after the PASPA decision, the stance on sports betting in New York began to shift, led by former Governor Andrew Cuomo. Initially reluctant, Cuomo reversed his position in January 2021, propelled by New York’s dire financial situation – a staggering $15 billion budget deficit exacerbated by the COVID-19 pandemic.
This prompted the need for a New York online sports betting bill.
The process of legalizing online gambling in New York was and continues to be very complex, involving political maneuvering, lobbying efforts, and public discourse.
Push for iGaming Legalization
Key figures like State Senator Joseph Addabbo Jr. and Assemblyman Gary Pretlow played a significant role in pushing for legalized sports betting in New York. Like Cuomo (post-hesitation period), they also recognized the potential for substantial tax revenue from the industry.
They were also keen for New York iGaming to remain competitive with neighboring states like New Jersey, Connecticut, and Pennsylvania, all of which had already legalized online gambling and were benefiting from the additional revenue at the time.
The online sports betting bill faced intense scrutiny, with intense debates over tax rates, the number of operator licenses to be issued, and the inclusion of safeguards against problem gambling.
Ultimately, these efforts bore fruit when, on April 21, 2021, former Governor Andrew Cuomo signed the sports betting bill, updating New York’s gambling laws. The bill prompted the state to establish the New York State Gaming Commission, the regulatory body overseeing all gambling-related activities in the state.
The bill set a 51% tax rate on gross gaming revenue, a figure that some criticized as excessively high, while others lauded it for establishing a robust regulatory framework. As in other states, the tax revenue generated from online sports betting would be allocated to various state funds.
According to the bill, 80% of the online sports betting income taxes are earmarked for public education, including school aid and educational initiatives. Around 10% goes to youth sports programs. To address the potential negative effects of gambling, 5% is allocated to programs focused on the prevention and treatment of problem gambling. The remaining funds are transferred to the state’s general fund to support a variety of governmental projects and costs.
It’s worth noting that this update in New York is focused solely on online sports betting rather than online casinos, which would likely require a constitutional amendment.
NY iGaming – Two Years After Legalization
Today, online sports betting is allowed only in the state. Following the pioneering launch by FanDuel, other major brands like Caesars Sportsbook, DraftKings, BetRivers, Unibet, Borgata, and others have made significant inroads in the state.
Projections turned out to be accurate and underestimations, as New York has proven to be a major fan of online sports betting. In 2022, under Governor Cuomo’s administration, the state collected $709.2 million in tax revenue from online sports betting, along with another $200 million from licensing fees.
By the first half of 2024, New York’s online betting market had already reached a value of over $20 billion.
The Future of NY Gambling – What to Expect
The question now is whether New York will move forward with a bill to legalize online casinos. While a bill to legalize online casinos has been introduced, it was unsuccessful. Governor Kathy Hochul’s budget plan for 2024-25 was approved without the inclusion of NY gambling expansion, even though Senator Addabbo, once again, played a key role as a strong advocate.
It seems that Governor Hochul is more focused on responsible gambling practices and addressing problem gambling. She signed legislation requiring gambling advertisements to include warnings about the potentially harmful and addictive effects of gambling.
Given the current legislative environment, it is unlikely that we will see both online sports betting and online casino gambling legalized in New York anytime soon. The push for online casinos faces significant hurdles and may not materialize in the near future, even though online sports betting is performing well.
Legal Online Gambling in New York: FAQs
Is Gambling Legal in NY?
Yes, certain forms of gambling are legal in New York. The state permits in-person casino gaming at commercial and tribal casinos, a state lottery, as well as online sports betting.
When Did Sports Betting Become Legal in New York?
In-person sports betting at casinos technically became legal in New York in July 2019. However, online sports betting only became legal in April 2021. Online sports betting and mobile wagering officially went live on January 8, 2022.
What is the Minimum Age to Gamble Online in New York?
The minimum age to gamble online in New York, including for online sports betting, is 21 years old. This age requirement is consistent with the state’s regulations for most forms of gambling to ensure responsible gambling practices.
