Gambling in the United States, whether in the form of commercial casino gaming, sports wagering, or lotteries, is regulated at the state level. Because each state has a unique history and relationship with gambling, it is unsurprising that the related statutes are very lenient in some places and extremely stringent in others. New York belongs to the latter category, showing little leniency toward gambling operations within its borders.
Various legal forms of gambling are available to residents of the Empire State, including commercial and tribal casinos, state-sanctioned lotteries, pari-mutuel wagering on horse races, video gaming terminals, and charitable bingo. Commercial and tribal gambling operations collectively generate over $2 billion in annual tax revenue for the state treasury, with most of the money allocated to educational programs and local governments.
The first legal retail sportsbooks arrived in New York in the summer of 2019, shortly after the repeal of the statewide ban on sports betting. In-person wagering on the outcomes of sporting events is currently available at a handful of commercial casinos. New York lawmakers have recently given the green light to remote betting, and the first mobile sportsbook apps went live in early January 2022.
While the local gambling industry is undoubtedly making headway as it continues to expand, New Yorkers have yet to witness the legalization of online casinos. Online chance-based games have not yet gained the approval of local lawmakers, but this has not prevented residents from playing at offshore casinos licensed in other jurisdictions.
Gambling Laws in New York
As in most states, gambling regulations in New York are somewhat intricate. The State Constitution and the Penal Law are the primary statutes that govern the industry. Several federally recognized tribal nations have compacts with the state, allowing casino games on their reservations under the Indian Gaming Regulatory Act. State-sanctioned lotteries are covered by the New York Tax Law.
New York State Constitution
New York Penal Law
New York Racing, Pari-Mutuel Wagering, and Breeding Law
Tribal Gaming Compacts in New York
New York Lottery Law
New York State Constitution
The New York State Constitution addresses gambling in Article 1, Section 9 (1), stating that gambling activities are generally prohibited, with a few exceptions. The legislation makes exemptions for state-operated lotteries, pari-mutuel wagering on horse races, and authorized commercial casino gaming at up to seven licensed facilities.
Casinos were illegal in the Empire State until voters approved an amendment in November 2013 that authorized them. Section 9 (2) allows villages, towns, and cities to vote on the conduct of bingo and similar number games for charitable purposes by nonprofit organizations.
The individuals who organize and operate such games are not entitled to any remuneration. Single prizes cannot exceed $250. Any series of wins obtained on one occasion must not exceed $1,000 in value.
New York Penal Law
The New York Penal Law also references gambling, defining it as staking or risking anything of value on outcomes based primarily on chance. The person placing the stake should receive something of value upon correctly predicting the outcome of the chance-based event. The law makes no distinction between brick-and-mortar and remote gambling.
The legislation also provides a definition of gambling devices, describing them as machines or other equipment used to conduct gambling activities between individuals or between a player and a machine. Bookmaking is defined as illegally accepting wagers from people as a business.
The New York Penal Law disallows the promotion of unauthorized gambling and the possession of gambling records or illicit gaming devices. Manipulating gambling results, using counterfeit gaming instruments, and other gambling-related frauds also constitute criminal offenses.
Players who engage in unauthorized gambling activities are not prosecuted under the New York Penal Law. Depending on their severity, gaming frauds constitute either Class A misdemeanors or Class E felonies.
Possessing unauthorized gambling properties and using them is considered a Class E felony as well. Individuals convicted of Class E felonies face probation sentences of up to four years. Those found guilty of Class A misdemeanors are subject to up to three years of probation, imprisonment of up to 364 days, and/or maximum fines of $1,000.
New York Racing, Pari-Mutuel Wagering, and Breeding Law
Article 13 of the Racing, Pari-Mutuel Wagering, and Breeding Law authorizes the operation of up to four casino resorts in Upstate New York. Tax revenue from these casinos helps fund the public school system and the municipalities that host the commercial gaming venues.
The legislation makes a distinction between two development zones. The first zone comprises New York City, Westchester, Suffolk, Putnam, Rockland, and Nassau. The second zone covers all other counties in New York State. Each zone is further divided into smaller development regions as follows:
Development Regions within Zone One
- Region 1 – the counties of Westchester, Putnam, and Rockland
- Region 2 – the counties of New York, Kings, Queens, Bronx, and Richmond
- Region 3 – the counties of Suffolk and Nassau
Development Regions within Zone Two
- Region 1 – the counties of Dutchess, Columbia, Sullivan, Ulster, Greene, Delaware, and Orange
- Region 2 – the counties of Albany, Washington, Fulton, Saratoga, Rensselaer, Schenectady, Montgomery, and Schoharie
- Region 3 – the counties of Warren, Franklin, Essex, Hamilton, St. Lawrence, Jefferson, and Clinton
- Region 4 – the counties of Chenango, Cayuga, Oneida, Madison, Lewis, Onondaga, Otsego, Oswego, and Cortland
- Region 5 – the counties of Seneca, Broome, Schuyler, Chemung, Tompkins, Tioga, and Wayne
- Region 6 – the counties of Wyoming, Yates, Steuben, Chautauqua, Allegany, Erie, Livingston, Cattaraugus, Genesee, Monroe, Ontario, and Niagara
The law authorizes the New York State Gaming Commission (NYSGC) to issue four commercial gambling licenses in the second zone. However, the regulatory agency has no remit to grant such permits for the first zone.
Licensees must begin gambling operations within two years of receiving their permits. Gaming facilities cannot receive authorization to operate in the counties of Madison, Cortland, Essex, Jefferson, Saint Lawrence, Hamilton, Franklin, and certain others. Article 14 of the same legislation allows for the provision of daily fantasy sports and outlines the criteria DFS operators must meet to gain authorization from the state regulator.
Tribal Gaming Compacts in New York
The Empire State hosts several Native American casinos that operate in line with the provisions of the Indian Gaming Regulatory Act of 1988. The law enables Native tribes to offer casino gaming on tribal lands, provided they have entered into compacts with state governments. Indian casinos are regulated separately by the National Indian Gaming Commission.
Currently, the New York government has established compacts with three sovereign nations – the Oneida Indian Nation, the Seneca Nation of Indians, and the Saint Regis Mohawk Tribe. The NYSGC monitors compliance with these compacts but otherwise has limited supervisory authority over tribal gaming businesses.
The Indian Gaming Regulatory Act divides gaming activities on tribal lands into three distinct classes.
The compacts with the Saint Regis Mohawk and the Oneida impose no restrictions on the number of gambling venues the two tribal nations can operate. There is no limit on the maximum number of gaming machines, either. The compact with the Seneca allows the tribe to run up to three gambling venues with no restrictions on the number of gaming machines.
The Oneida and Saint Regis Mohawk compacts have no expiration date and remain effective until the parties involved agree to terminate them in writing. The initial Seneca compact expired in 2016 and was subsequently renewed for seven more years.
New York Lottery Law
State-sanctioned lotteries and video lottery terminals are governed by the provisions outlined in the New York Tax Law, specifically Article 34. State-operated lotteries fall under the regulatory oversight of the Division of Lottery, which is part of the New York State Gaming Commission.
The article lists the regulatory powers and duties of the lottery division, along with the requirements sales agents must meet to receive authorization. It prohibits the sale of lottery tickets to individuals under the legal age of 18. Employees and board members of the division cannot participate in state lotteries or claim lottery prizes.
Commercial Gambling License Types and Requirements
The Racing, Pari-Mutuel Wagering, and Breeding Law allows the issuance of three types of licenses for commercial gambling: land-based gaming facility licenses, casino vendor licenses, and occupational permits for casino employees.
Gaming Facility Licenses
Casino Vendor Licenses
Occupational Licenses
Gaming Facility Licenses
Candidates for gaming facility permits must prove they have gained sufficient support from the host communities and possess adequate experience in the gambling industry. They must meet minimum licensing thresholds and undergo an extensive investigation to ensure suitability. Candidates convicted of serious crimes such as perjury, fraud, or embezzlement are disqualified from the application process.
Application forms are provided by the New York State Gaming Commission. Applicants must supply accurate contact information, their principal address, and background details about board members and stockholders.
If approved, applicants must build their proposed commercial gaming venue within two years. The application itself is costly, requiring a $1 million upfront payment to cover background investigation expenses. Each license has an initial term of ten years.
Casino Vendor Licenses
Vendor licenses are required for the distribution, sale, manufacture, and repair of slot machines and other gambling devices. Third-party testing agencies that perform audits on behalf of locally licensed commercial casinos also need such permits. Gaming vendors must demonstrate integrity and good character to gain approval from the New York State Gaming Commission. Vendor licenses expire after five years and may be renewed thereafter.
Occupational Licenses
Occupational licenses are required for all employees directly involved in gaming operations on the casino floor. Applicants must generally be residents of New York State, although the regulator may waive this requirement for key employees whose positions require work outside the state. Candidates must provide personal information and undergo detailed background checks. Occupational licenses are valid for five years and must be renewed after that period.
Sports Betting Law and Regulation in New York
Bettors in the Empire State can legally wager on sporting events thanks to the passage of the Upstate New York Gaming Economic Development Act of 2013. The legislation authorized in-person sports wagering at four retail locations, but the NYSGC did not introduce draft regulations for retail sportsbooks until March 2019. The regulatory framework was finalized shortly afterward, and the first authorized retail sportsbook in the state opened in July 2019.
Requirements and Taxes on Retail Betting
Mobile Sports Betting
Requirements and Taxes on Retail Betting
Upstate commercial gaming operators can offer in-person sports wagering with authorization from the NYSGC. The same applies to tribal casinos that hold Class III gaming licenses. No initial licensing fees apply to commercial venues approved for in-person betting.
Betting permits have the same term as gambling facility licenses. Retail sportsbooks are subject to a 10% tax on their gross revenue, and a 0.25% excise tax is imposed on each authorized bet under Title 26 of the United States Code. New York sportsbooks are not required to pay integrity fees to professional sports leagues.
Licensed sportsbooks must clearly display the odds for each available event, whether professional or collegiate. Wagering on games that involve New York college teams or underage players is strictly prohibited.
Mobile Sports Betting
Legal online and mobile sports betting arrived in the Empire State in April 2021 when Governor Andrew Cuomo approved a new budget bill for the 2022 fiscal year. The NYSGC finalized regulations for remote betting operations toward the end of 2021, paving the way for the launch of the first mobile sportsbooks in early 2022.
Bettors from anywhere in the state can participate, provided they are physically present in New York. Mobile betting providers must locate their servers within one of the upstate commercial casinos. The initial licensing fee is $25 million.
The land-based casinos receive $5 million annually from each platform provider whose servers they host. Mobile sportsbooks are not required to use official league data or pay integrity fees. They are taxed at 51% of their gross betting revenue from local players.
Legal Status of Online Casino Gambling
Remote sports betting and daily fantasy sports (DFS) are the only authorized forms of online gambling in the Empire State. Online fantasy sports providers must register with the New York State Gaming Commission under Section 1402 of the Racing, Pari-Mutuel Wagering, and Breeding Law.
The local regulatory body currently grants only temporary DFS permits, each lasting three years with an option for renewal afterward. Approximately fifteen operators hold temporary licenses for the provision of such contests, including DraftKings, Boom Entertainment, RealTime Fantasy Sports, Yahoo Sports, and FanDuel.
Conducting interactive fantasy sports without registration violates Section 1412 of the above-mentioned legislation. Licensed DFS providers must restrict underage individuals from participating in the contests and allow those of legal age to exclude themselves. DFS advertising materials should not target self-excluded players or minors. The ads should also contain clear information about the average winnings players can generate in the contests.
All registered DFS providers are subject to a 15% tax on the gross revenue they generate in New York State. The authorized businesses must also pay an additional annual tax of 0.5%, which may not exceed $50,000.
All other forms of interactive gambling, including poker, remain illegal for now. No technical measures, such as IP blocking, are in place to safeguard local players from unauthorized remote gambling businesses. That said, some operators licensed under foreign jurisdictions voluntarily restrict access for customers with New York-based IP addresses.
New York Gambling Regulators
The New York State Gaming Commission (NYSGC) is the official agency that governs gambling activities within the Empire State. The Schenectady-based agency supervises commercial casino operators, video lottery terminals, land-based lotteries, sports betting, daily fantasy sports, and horse racing. Class III gaming conducted on tribal lands also falls under its regulatory oversight.
The NYSGC was established in early 2013 after the New York Lottery merged with the State Racing and Wagering Board. The agency consists of seven members selected by the governor with the advice and approval of the Senate. Each commissioner must have at least five years of administrative experience along with permanent residence in New York.
Conclusion
The gaming industry in the Empire State has made considerable strides in recent years, but remote gambling remains in its infancy. Sports betting and daily fantasy sports are currently the only legal forms of online wagering, but the sector is likely to see further expansion in the future.
New York is already witnessing the financial benefits of regulated sports wagering, as the state collected over $70 million in tax revenue during its first month of legal betting alone. Given all this, it is safe to assume lawmakers could move to legalize remote casino gaming in the years to come. A recent bill proposed regulations for online poker, but it has not yet passed into law.
