Gambling in the US, be it in the form of commercial casino gaming, sports wagering, or lotteries, is regulated at a state level. As each state has a unique history and relationship with gambling, it is unsurprising the related statutes are very lenient in some places and extremely stringent in others. New York belongs to the second category, showing little leniency toward gambling operations on its territory.
Various legal forms of gambling are available to the 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 fetch over $2 billion in annual tax revenue to the state treasury, with most of the money going toward various education programs and local governments.
The first legal retail sportsbooks arrived in New York in the summer of 2019, shortly after the fall of the statewide ban on sports betting. In-person wagering on the outcomes of sports events is currently possible at a handful of commercial casinos. New York lawmakers recently gave 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 with the further expansion, New Yorkers are yet to witness the legalization of online casinos. Online chance-based games have not yet gained the approval of local lawmakers but this hardly prevents the population from playing them at offshore casinos licensed in other jurisdictions.
Gambling Laws in New York
As is the case in most states, the legalities surrounding gambling in New York are somewhat intricate. The primary pieces of legislation that govern the sector are the State Constitution and the Penal Law. Several federally recognized tribal nations have compacts with the state government, offering casino games in their reservations under the Indian Gaming Regulatory Act. State-sanctioned lotteries fall under the scope of the New York Tax Law.
Commercial Gambling License Types and Requirements
The Racing, Pari-Mutuel Wagering, and Breeding Law allows for the issuance of three types of licenses for commercial gambling – for landbased gaming facilities, casino vendors, and occupational permits for casino employees.
Gambling Taxes in New York
Under Section 1351 of the New York Racing, Pari-Mutuel Wagering and Breeding Law, licensed commercial casinos operating in the state must pay taxes on their gross gambling revenue. The rates vary based on game type and location. The net proceeds from slot machines are subject to tax rates of 39% in region one, 45% in region two, and 37% in region five.
The gross revenue generated from all other available games is taxed at 10%. License fees for commercial gaming range between $20 million and $75 million, again depending on the location of the gambling business. Additionally, operators must pay $500 annually for every slot machine or gaming table on their premises.
Licensees authorized to provide both pari-mutuel wagering and video lottery terminals pay taxes on their VLT profits. The electronic-device revenue of racinos is charged at average effective rates of 65%. The license fees and tax proceeds collected from commercial casinos are invested in the Commercial Gaming Revenue Fund.
The tax revenue from the racinos is distributed between various education funds and agent commissions, among others. Some of the tax money goes toward the development of the local horse racing industry and various thoroughbred breeding organizations.
3Tribal Casino Taxes
Tribal casinos operating within New York State must comply with tax rates of 25% imposed on their gross profits from gaming devices. A portion of the gaming revenue is used for different tribal programs, the overall welfare of the tribal community, and the promotion of local economic development. Some of the funds are donated to charities as well.
4Taxes on Players’ Winnings
Gamblers based in the Empire State pay 8.82% withholding taxes on prizes exceeding $5,000. Commercial casinos deduct the corresponding amount on the spot. Tribal casinos may also withhold gambling winnings provided that specific conditions are met. In such cases, the casino will issue W-2G to players who meet the withholding criteria.
Social Responsibility and Player Protection
Section 1332 of the Racing, Pari-Mutuel Wagering, and Breeding Law prohibits gambling participation on behalf of individuals under the age of 21. There are no restrictions on the hours of operation of the commercial casinos. The minimum legal age for lottery participation is lower at 18 years old. Some of the tribal casinos with Class III licenses can take wagers from players aged 18 as well.
2No Gambling for Casino Employees
Key casino employees cannot participate in gambling activities in any licensed commercial gaming venue based in the state under Section 1336. The same goes for employees who are directly involved in the gambling operations, including dealers, boxmen, pit bosses, security and surveillance personnel.
3Rules on Dealer Gratuities
New York dealers have the right to accept gratuities from the patrons but should immediately deposit all tips into a designated lockbox. The gratuities are then proportionately distributed among all dealers depending on the number of their working hours. Dealers who conduct poker cash games and tournaments are allowed to retain their individual tips in some cases.
4Player Return and Other Rules
The minimum theoretical return of each licensed slot machine should be at least 85%. All gaming equipment undergoes regular rigorous testing for compliance with the local regulatory requirements. Licensed casinos cannot employ shills or barkers to lure patrons into playing a given game.
Each gaming table should have a plaque that clearly indicates the minimum and maximum bets players can make. Debts incurred through gambling are unenforceable under the New York General Obligations Law. Offering complimentary alcoholic beverages to casino patrons is legal.
Licensed commercial casinos must place signboards with responsible gambling information at all entrances and exits. Each sign should contain a clear warning about the legal gambling age on the casino floor.
Problem gamblers can voluntarily exclude themselves from casinos, horse race betting, daily fantasy sports, and video lottery gaming under Section 1404 of the Racing, Pari-Mutuel Wagering and Breeding Law. Voluntary exclusion is also an option at some tribal venues like the Seneca Buffalo Creek Casino and the Turning Stone Resort Casino.
Gambling operators can advertise their services provided they comply with certain restrictions. For example, all marketing materials of this kind should contain problem gaming hotline numbers. Excluded individuals should not receive gambling advertisements, either. The marketing materials must not contain any images of underage persons engaging in wagering activities.
Sports Betting Law and Regulation in New York
Punters from the Empire State can legally bet on sports 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 it was not until March 2019 that the NYSGC introduced draft regulations for retail sportsbooks. The regulatory framework was finalized shortly after and the first authorized retail sportsbook in the state commenced operation in July 2019.
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 can only grant temporary DFS permits for the time being with a duration of three years and the option for renewal afterward. Fifteen or so 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 persons from participating in the contests and allow those of legal age to exclude themselves. DFS advertising materials should not target self-excluded players and minors. The ads should also contain clear-cut 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 should contribute additional annual taxes of 0.5% to the state coffers. However, this additional tax must not exceed $50,000 per year.
All other forms of interactive gambling, including poker, remain illegal for now. No technical measures like IP blocking are in place to safeguard local players from unauthorized remote gambling businesses. With that said, some operators licensed under foreign jurisdictions voluntarily restrict the access of customers with New York-based IPs.
New York Gambling Regulators
The New York State Gaming Commission (NYSGC) is the official agency that governs gambling activities on the territory of the Empire State. The Schenectady-based agency supervises commercial casino operators, video lottery terminals, landbased lotteries, sports betting, daily fantasy sports, and horse racing. Class III gaming conducted on tribal lands also falls under its regulatory oversight.
The NYSGC came to life 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 a permanent residency in New York.
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 the only legal forms of online wagering at the moment but the sector is likely to see further expansion in the future.
New York is already witnessing the financial benefits of regulated sports wagering – 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 follow. A recent bill proposed regulations for online poker but it has not yet passed into law.