A Click Away: Online gambling in New York is still a work in progress

A Click Away: Online gambling in New York is still a work in progress

A Click Away: Online gambling in New York is still a work in progress
October 8, 2015

The business of gambling, while more often associated with Atlantic City than the Empire State, is seeing a massive expansion in New York. An amendment to the state constitution in 2013 allowed casino gambling outside Indian reservations and expanded horse tracks into full-fledged commercial institutions. But another realm of the industry is lagging behind:online gambling.

Since 2011, when the U.S. Justice Department issued an opinion stating that the federal Wire Act, which bans certain types of gambling, actually permits states to legalize it online, New Jersey, Delaware and Nevada have set up their own online gambling systems through casino-run websites. But in New York, online gaming, as its supporters call it, is still a work in progress.

Currently, the only legal gambling New Yorkers can do online is through purchased subscriptions to certain state lotteries and online bets on horse racing that occurs within the state. But state Sen. John Bonacic introduced a measure last year that seeks to legalize Internet versions of Texas Hold ’em and Omaha Hold ’em poker. The bill, which has companion legislation introduced by Assemblyman Gary Pretlow, is still in committee and wouldn’t allow any games of chance, such as blackjack and roulette, like New Jersey does. But as one of the big supporters of the new casinos going up across the state, Bonacic sees online gambling as a necessary factor in the gambling equation, especially with young people.

“If we are going to be in gaming as a revenue enhancer for the state … I believe that what you are going to see is that the (millennial generation) doesn’t care to visit as much mortar and brick as the older generation,” Bonacic said. “So if you’re in the gaming business and you’re going to invest substantial private dollars, you’ve got to attract the (millennials).”

It would appear, however, that New Yorkers of all generations seem open to the idea of gambling from their computers. An April 2014 poll from Global Strategy Group, commissioned by casino developers Caesars and MGM, found 75 percent of voters thought individual states should be able to decide whether to allow online poker. But that support doesn’t seem to be translating to the Legislature, where hearings on the issue have been sparsely attended by members of the state Senate Committee on Racing, Gaming and Wagering.

At one of those hearings on Sept. 9, one of the main concerns brought up by the three senators in attendance was whether online poker would actually help or hurt casinos. An H2 Gambling Capital analysis determined that as much as $110 million in revenue is generated through illegal online poker games in New York and that a legalized online poker system could generate $50 million to $80 million in annual taxes. But most revenue might not go to the brick-and-mortar casinos themselves.

“The online gaming customer is a different customer than the land-based customer,” Tom Balance, president of Borgata Hotel Casino & Spa in Atlantic City, testified at the hearing. “We find that the online customer ... they’re playing for 15 minutes, 20 minutes at a time. In order to make the commitment to come to a land-based casino, you’ve got to get up, get dressed, shower, drive there, you’ve got to make a big commitment, so you’re going to be there for a long time. The online customer is more of a nibbler.”

In New Jersey, which initially predicted that online gambling would raise $150 million in taxes in its first year, revenues actually averaged around $10 million a month, with only 18 percent of total revenue coming from online poker.

But while casinos in the Atlantic City area have been struggling to bring in customers, Bonacic and Pretlow both argue that online users are not hurting brick-and-mortar casinos.

“What I’ve found in talking to the professionals from Jersey, from Vegas … it’s that they do (online gaming) to attract people to come into the actual casinos, but they gain revenue also from online gaming,” Bonacic said. “One doesn’t hurt the other.”

All of this could be moot, however, if online gambling opponents have their way at the national level. Sheldon Adelson, the billionaire political megadonor and chairman of Las Vegas Sands Corp., is pushing for Congress to pass the the Restoration of America’s Wire Act, which would ban regulated online gambling. The bill, sponsored in the Senate in 2014 by Republican presidential candidate Sen. Lindsey Graham, is currently stalled in committee, but supporters of the bill have considered changing it to place a moratorium on future online gambling projects instead of an across-the-board ban, which could make it more viable in 2016.

Either way, the issue of online gambling has taken a back seat in New York as lawmakers focus on setting up the new casinos.

“(Online gambling) won’t happen this year,” Pretlow said. “I’ve been very public in stating that it won’t be approved in New York until at least all the casinos are up and running, and they have to be a part of it and the racinos have to be a part of it.”

Jeremy Unger