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The Metropolitan Transportation Authority (MTA) will finally receive much-needed funding from the three downstate casino licenses, as it has been confirmed in the recently finalized New York State fiscal year 2025 budget. However, lawmakers had the option to pursue an alternative approach to swiftly secure additional funds for the MTA.
The main cause for the funding requirements of the MTA is the significant decrease in ridership following the onset of the COVID-19 pandemic. Without the executive budget rescue package from Gov. Kathy Hochul, subway, bus, and commuter railroad services would have been at risk.
However, there is no need for that as there are currently three New York casino licenses available for anyone to acquire.
However, there was an alternative solution that could have generated a greater amount of funding for the MTA.
Downstate casino licensing to bail out the MTA
The New York State Gaming Commission (NYSGC) has not set a specific timeline for announcing the three winning downstate casino bids. However, once the announcement is made, the groups supporting the selected proposals will be required to pay licensing fees amounting to $500 million.
The entire amount of $1.5 billion given to the NYSGC will be allocated to support the revitalization of the MTA. Furthermore, a portion of the projected incremental tax revenue, which ranges from $231 million to $413 million, will also be directed towards the MTA.
The only problem is that the funding will not be available until 2026. The NYSGC has a crucial decision to make about granting licenses to casino proposals, and the process is expected to be lengthy and complex.
NY online casinos offer more funding sooner
Although the state’s FY2024 budget did not include the legalization of online casinos, if it had, New Yorkers would still have to wait until the following year to access these games. Nevertheless, this timeline would have been faster compared to the downstate casino licenses.
Furthermore, a significant portion of the tax revenue generated by the gaming industry in NY is allocated towards supporting public education. In an interview conducted by playin-ny prior to the completion of the state budget, Senator Joe Addabbo expressed his dissatisfaction with the decision to divert gaming funds from education to the MTA.
Addabbo expressed his concerns, stating, “It’s not easy for me to justify taking funds away from education and redirecting them to the MTA through downstate licenses. The gaming industry contributes approximately $4 billion annually to education, and I cannot confidently go back to my district and support such a decision. It makes me uncomfortable.”
Online casinos offer a fresh source of income that does not require diverting funds from education.
According to Addabbo, we have the capability to provide Governor Hochul with a larger sum of money in a shorter period of time, before 2026. This money is unallocated and is derived from a new product known as iGaming. It is important to note that this funding is not being taken away from education, despite what is stated in the bill. The mention of education in the bill is merely a temporary placeholder. These funds present an opportunity to generate new revenue streams, allowing for potential allocation towards healthcare, social services, and even the MTA.
Online casinos could become NY’s largest gaming revenue stream
Since its launch in January 2022, legal sportsbooks in New York have generated an impressive amount of tax revenue for the Empire State, surpassing $1 billion.
Once online casinos are finally legalized, they are expected to generate a considerably larger revenue compared to mobile sports betting.
During a Senate Standing Committee on Racing, Gaming, and Wagering meeting earlier this year, Howard Glaser, the global head of affairs at Light & Wonder, projected that the tax revenue generated by online casinos in New York would reach $425 million in the first year. Glaser predicts that this figure would significantly rise to $720 million annually by the fifth year.
According to Glaser, the states that have embraced iGaming have discovered that while sports betting may be the initial attraction, it is iGaming that truly takes the lead when it comes to generating revenue.
During the committee hearing, Addabbo highlighted that New York experiences an annual loss of approximately $4 billion due to the absence of regulation in online casinos. A portion of this financial loss is directed towards neighboring states that provide regulated online gambling options, while another portion is diverted to illicit offshore sportsbooks.
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