The Loopholes in the New York Online Casino Bill

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New York may be about to change its laws regarding online gambling. This would cover casinos, lotteries, and sports betting. We discuss it and the possible loopholes below. 

New York has had a long-held resistance to online casinos. It has always been against gambling in many forms. Yet, as the states around it begin to embrace online gambling and enjoy the taxable revenue it can bring, should New York be doing the same? And does its newest casino bill provide too many loopholes to work correctly?

Third Time Lucky For New York’s Casino Bill

New York has often proposed changes to its laws on gambling and had them rebuked. Yet the third bill is on its way and could finally see a change in the air for gamblers and allow operators in the state. However, there have been some major surprises, with glaring omissions and the bill coming down hard on loopholes in the law.

The bill will be known as S2614. It has been put forward by Senator Joe Addabbo. He is the chair of the Senate Racing, Gaming, and Wagering Committee. It is almost identical to last year's bill. However, it has some upgrades regarding casino-style games played online.

Proposed High Tax Rate

One proposal is a gargantuan tax rate of 30.5%. This would put it in a tax bracket that only Delaware (50%), New Hampshire, Rhode Island (51%), and Vermont (31.7%) have applied to online platforms. In many states, this seems to be working. For example, this March saw gambling revenue for Delaware break records at $300 million in sports betting alone.

However, this rate is double that of neighboring New Jersey. This has traditionally been a spot where the people of New York have gone should they wish to partake in gambling activities. If this cost is passed onto the consumer, then New Jersey is going to be a much better option for both operators to work from and for New York residents to gamble. Just a short hop over the border and bets can be placed for the next few weeks.

The online casino industry in New Jersey, and other states that have allowed online gaming, has reached an extremely secure point. This must be something that buoys the confidence of New York's lawmakers. Websites like Sportsbookreview.com manage to review operators across the US, like New Jersey. By ranking them on factors like safety, payment methods, and gaming choice, it has increased industry standards. With bonuses, players can even get used to platforms without having to deposit large amounts. All of this infrastructure is in place, should New York want it.

Limiting Gambling to New York

Another focus will be to limit online gambling to New York, making sure that people who use these services within its borders are protected and within the law. Limiting online gambling to those within the state is prevalent throughout the US. For example, you can't access New York online services if you are in another state, particularly in those where it is deemed illegal.

The focus will be firmly on those who decide to provide services to New Yorkers from outside, namely offshore operators. These are almost impossible to police in a world of VPNs and global connections.

However, unauthorized offshore operators can be banned and face heavy fines. This is something that has worked elsewhere in countries like New Zealand and has even penalized third-party affiliate sites that have suggested the services of unlicensed third-party operators.

Server Housing in State-Licensed Casinos

Another addition is that to ensure regulatory oversight, online gambling servers must be housed in state-licensed casinos. This presents several advantages and disadvantages, along with one possible major loophole.

To examine this, we need to go back to New Jersey in 2011. Here, gambling was only allowed in Atlantic City. A suggested bill would have meant that online gambling was permitted if the servers were housed in licensed casinos, as has been suggested in New York. However, this was vetoed due to the possibility of terminals, where bets and games could be placed, creating unlicensed casinos. The worry was that placing them in restaurants and cafes meant that anywhere could become a hub for gambling.

This was before the invention of the smartphone. Now, technically, anywhere can become a casino if you have a device and a connection. Despite this, the law does fail to address the use of possible terminals. This is especially important when it comes to online slots, which are now primarily digital devices akin to a computer. Could a registered casino place these terminals wherever it wished, if its servers were within their building?

Lotteries and Sweepstakes

There will also be changes to online lotteries. This will include adaptations to how lotteries are managed and will curb unregulated providers. However, it also tries to address what is, in itself, a loophole: The sweepstake casino.

These have grown in popularity over the last few years, particularly in states where online casinos are banned. They provide all the services a casino would, including slots and table games.

Sweepstake casinos get away with this by operating under the law that governs lotteries and sweepstakes. They don't ask people to make deposits, but instead, let them play for digital currencies. This can then be cashed in as prizes or gift cards.

Forecasts suggest the market will be worth over $11 billion by the end of the year. With the addition of sweepstake sportsbooks, which have recently become popular, this will only get bigger.  Addabbo believes many of them are located offshore, are unregulated, and target the most vulnerable in society. Though he admits they are hard to clamp down on and regulate, he wants them banned or incorporated into legalized casinos.

Thus, there are some loopholes in this bill. For residents of New York, it may not even make a difference. Most people use offshore operators or travel to New Jersey. Yet this could have a huge impact under the surface, bringing in taxable revenue and clamping down on rogue operators. With a successful scheme in neighboring states, it could really be third time lucky for New York’s casino bill. Yet its success will depend on the closing of these loopholes.

If you or anyone you know has a gambling problem, call 1-800-GAMBLER.