New York Governor Excludes iGaming from 2025 Budget, Impacting 2024 Prospects

Governor Kathy Hochul’s omission of iGaming from New York’s 2025 budget has ignited a contentious battle.

Missed Opportunity: New York’s Omission of iGaming

In a critical development for the future of online gaming in New York, Governor Kathy Hochul‘s 2025 executive budget has dealt a significant blow. Her failure to include iGaming in the budget has raised concerns among supporters of this burgeoning industry, notably State Senator Joseph Addabbo, who recently introduced a revised iGaming bill, Senate Bill S8185.

Senator Addabbo’s latest bill builds upon his previous efforts to introduce online gaming in the Empire State but with a crucial addition—the inclusion of ilottery. However, the absence of iGaming from Hochul’s budget has cast shadows over the prospects of this legislative endeavor.

Governor Hochul’s proposed budget for 2025 amounts to a substantial $233 billion, representing an estimated $1 billion increase from the previous year. Notably, Hochul aims to achieve this without resorting to income tax hikes. While this fiscal plan covers various aspects, the conspicuous absence of iGaming has raised questions about the state’s strategy regarding this potentially lucrative sector.

However, amidst this omission, Hochul did incorporate a provision to extend several pari-mutuel, racing, wagering, and breeding law provisions that were nearing expiration, extending their validity by one year.

The Implications of Omitting iGaming

For proponents of iGaming, Governor Hochul’s decision to exclude this sector from the budget is a substantial setback. Brendan Bussmann, Managing Partner at B Global Advisors, emphasizes the gravity of this omission, stating that the industry now faces an uphill battle.

To assess the potential impact of iGaming on New York’s economy, Bussmann points to the state’s thriving sports betting market, which consistently contributes substantial revenue to the state coffers. Notably, New York’s sports betting tax rate stands at a significant 51%. In stark contrast, Senator Addabbo’s latest bill proposes a tax rate of 31.5% on gross gaming revenue generated from iGaming activities.

Bussmann underscores the success of sports betting in the state, highlighting the impressive revenue it generates due to the high tax rate. With a large population and a considerable share of the sports betting market, New York has reaped substantial financial rewards. However, the proposed tax rate for iGaming is notably lower.

“Sports betting has been a significant revenue generator,” Bussmann explains. “With a 50% tax rate, substantial revenue is expected, especially in one of the most populous states. When you capture half of all the revenue, the numbers become substantial.”

Moreover, New York finds itself encircled by neighboring states that have embraced sports betting, including Pennsylvania, Connecticut, Massachusetts, and New Jersey. The competitive landscape has prompted multiple operators to set their sights on New York, primarily due to its densely populated urban centers and the potential for substantial profits.

Bussmann points out that the allure of New York City, with its large population, makes it a coveted destination for gaming companies. The competition is fierce, as operators aim to establish a foothold in this lucrative market. However, the omission of iGaming from the budget may affect the state’s ability to harness the full potential of this industry.

Looking Ahead: The Future of iGaming in New York

The decision to exclude iGaming from the 2025 budget represents a pivotal moment in New York’s approach to the evolving landscape of online gaming. As the industry continues to thrive in neighboring states and across the nation, the state’s regulatory decisions take on heightened significance.

The omission of iGaming raises questions about New York’s readiness to capitalize on the economic potential of this sector. While the state has enjoyed considerable success with its sports betting market, the lower proposed tax rate for iGaming presents a challenge in terms of generating comparable revenue.

The competitive nature of the gaming industry, especially in a densely populated area like New York City, requires a strategic approach. Operators vie for market share, and their presence contributes to the state’s economy through various channels, including taxation, job creation, and tourism.

In light of these considerations, the omission of iGaming from the budget warrants a closer examination of the state’s long-term vision for this sector. While the immediate financial implications may not be apparent, the decision carries consequences for the state’s economic prospects.

The path forward for iGaming in New York remains uncertain. Advocates of the industry, including Senator Addabbo, will continue to push for its inclusion and legalization. As the state evaluates its options, it must balance the potential revenue from iGaming against the competitive landscape and the desire to create a thriving and regulated market.

In summary, Governor Kathy Hochul’s exclusion of iGaming from New York’s 2025 budget marks a significant chapter in the state’s evolving gaming landscape. While challenges persist, the industry’s advocates remain resolute in their pursuit of a regulated and prosperous iGaming market in the Empire State. The decisions made in the coming months will shape the future of online gaming in New York and its impact on the state’s economy.