New York´s Senate yesterday passed a bill to regulate online poker, but doubts exist whether the bill will pass the Assembly – if it gets debated at all.
Wind back the clock twelve months, and this time last year we were reporting on the New York Senate passing a bill to regulate online poker in the Empire State. The bill had the same author, contained the same licensing fees and tax rates, and passed by a similar majority to yesterday´s 54-8 vote.
Practically the only difference between the 2016 bill and the 2017 bill is that Senator John Bonacic´s proposals now contain a bad actor clause that cast a doubt over the participation of PokerStars in a regulated market. Other than that, it is pretty much how you were.
To complete the feeling of déjà vu, doubts exists whether the bill will pass the Assembly – if it gets heard at all. Last year, Gary Pretlow – sponsor of a companion online poker bill in the Assembly – said the votes were not there for the passage of the bill, and it eventually died without being debated.
With only five days remaining in the legislative calendar, if the proposals to regulate online poker in New York are going to become law, they still have to pass the Assembly Racing, Gaming and Wagering Committee, the Assembly Finance Committee, and the full Assembly. Even then they would still have to find favor with Governor Andrew Cuomo before the wheels of regulation are set in motion.
More Objections to Regulated Online Poker than Last Year
The proposals to regulate online poker have more objections to overcome than they had last year. Anti-online gambling campaigners involved in a legal challenge against the passage of last year´s DFS bill say they will launch a similar legal challenge against any bill that regulates online gambling by reclassifying the subject of the bill (in this case poker) as a game of skill to circumnavigate the state´s constitution.
Although the state´s commercial brick-and-mortar casinos are said to be in favor of the proposals to regulate online poker in New York, concerns have been raised about the cannibalization of the fledgling industry and of existing tribal casinos. This is said to be a major concern of Governor Cuomo and some tribal groups excluded from applying for operating licenses are already lobbying against the proposals.
Although there has been no official word about the bad actor clause from PokerStars, it is also likely that the owners of the world´s largest online poker site – Amaya – will lobby against the proposals in their current format. The company managed to stall any progress towards regulation in California and – all the time PokerStars is excluded from participating in a regulated New York poker market – they will likely attempt the same again in order to prevent competitors gaining a commercial advantage.
Assembly Not So Blind to Limited Revenue Opportunities
One of the factors that has prompted the Senate to enthusiastically get behind regulated online poker is the promise of revenues from license fees ($10 million each) and taxes (15%) to help fill a $3.5 billion deficit in the state´s budget. With Senator John Bonacic´s proposals allowing for up to eleven poker-only licenses, Senators have been rubbing their hands at the prospect of a $110 windfall.
However, despite New York being the fourth most populous state in the country, it is not going to be able to support any more than three operators. Therefore the likely maximum “windfall” the state will receive is $30 million and, as operators will be able to write off their tax liabilities against the license fee, that is all the income the state will receive during the first three years of regulation.
If the Assembly get to debate the bill within the short amount of time remaining in the legislative calendar, the limited revenue opportunities compared with the cost to the state of regulation will likely be a topic within the debate. Once the Assemblymen do the math, the likely outcome is the process will be abandoned for another year – maybe more. Roll forward the clock another twelve months, and we fully expect to be experiencing the feeling of déjà vu all over again!