On Tuesday, January 17, 2023, New York State Rep. J. Gary Pretlow (D) introduced a bill that would make licensed online poker legal in new york. Pretlow’s legislation, AB1380would specifically classify certain forms of poker as games of skill, making them exempt from state gambling prohibitions.
More about the proposed bill
Online poker account would allow New York State Gaming Commission to issue up to 11 licenses for interactive games. Each license will be valid for 10 years and cost $10 million. However, the $10 million fee may be applied to the licensee’s tax liability during the first 60 months of operation.
The tax rate is set at 15% of gross gaming revenue. This money will be paid into the state’s lottery fund along with all interest, penalties, fines and forfeited prizes related to interactive games. The lottery fund is distributed throughout the country for educational purposes.
Who can get a license?
Any entity already licensed by New York to operate video lottery games or operate a Class III gaming facility will be eligible to apply for a license. The first category covers commercial casinos and racinos throughout the state, while the second is made up of tribal casinos.
However, license applicants must have “interactive gaming experience by being licensed in a country with comparable licensing requirements.” At first, this appears to narrow the pool of potential gaming operators to those who have a physical presence in New York and operate online gaming ventures in other states.
However, a careful reading of the text reveals that applicants are instead permitted to promise to acquire “adequate business competence and experience working with interactive games”, leaving the door open to agreements with organizations that do you have the interactive gaming experience you need. Strengthening this interpretation is the fact that the bill specifically mentions that applicants may use a “partnership, joint venture or other contractual arrangement” to fulfill their licensing responsibilities.
Although the number of licensees is limited to 11, each licensee is allowed to operate multiple gaming platforms as long as each platform is approved by the Gaming Commission. This means we can see multiple skins on one site created for branding, marketing or other purposes.
What games are allowed?
Texas Hold’em and Omaha Poker are the two specific games considered “permitted games” in the bill along with “any other poker game that the commission determines to be the material equivalent of either, whether in a cash game or tournament.” This limits the scope of the bill specifically to poker, excluding blackjack, roulette, slots or any other player-versus-house casino games. The status of other poker variants such as Seven Card Stud or Five Card Draw is unclear, but since they are not truly equivalent to Omaha or Texas Hold’em, they are probably not allowed.
According to Section 5 of the bill proposed by Pretlow, “This act shall take effect on the one hundred and eightieth day after it becomes a law.” During this 180-day period, the Gambling Commission will be tasked with establishing rules and issuing licenses.
Albany is not known for getting things done quickly. Still, once legislation is approved, implementation tends to be relatively quick for a state the size of New York. For example, mobile sports betting was approved as part of the state budget bill on April 18, 2021, and the first online sports betting apps in New York were launched on January 8, 2022: a turnaround of just under nine months.
This means that if AB1380 becomes law, we could see online poker up and running as early as the fourth quarter of 2023. All the stars will have to align perfectly for this to happen; a more realistic target date would be sometime in 2024.
Success in sports betting makes online poker law more likely
Assemblyman Pretlow has been trying to make regulated online poker a reality in New York for some time. Almost every year from 2014 to the present, he has introduced legislation to do so, often jointly with his colleagues in the State Senate John Bonacic (R) and Joseph Adabo (D). However, none of these bills made it to the governor’s desk.
This year may be different because we now have a full year of New York online sports betting results in the books and the numbers are better than almost anyone could have predicted. The nine licensees combined earned $16.193 billion in 2022, generating $1.359 billion in gross gaming revenue. With the hefty 51% tax rate in effect, that means $693.124 million to the state coffers. By comparison, New York’s 11 physical sportsbooks combined for a relatively anemic $95.6 million over the same time period.
These numbers make it clear that online betting is the way forward, and lawmakers who previously doubted the revenue potential of internet poker may reconsider after seeing the sports betting statistics. With tribal casinos, commercial casinos and racetracks all covered in the new legislation, it’s hard to see significant opposition coming from existing gambling interests.
Skill vs. Chance
Let’s take a moment to discuss the skill vs. luck debate as it relates to online poker. Pretlow’s bill cited the decision in United States v. Di Cristina where Federal Judge Jack B. Weinstein ruled that poker is a game of skill. The bill also states that Texas Hold’em and Omaha “are considered complex forms of poker that involve player strategy and decision-making and that pit the skill levels of players against each other. As games of skill, these forms of poker do not fall within the definition of gambling prohibited by criminal law.” There is one major legal change this bill requires that many have overlooked. This would change the existing definition of “contest of fortune” in New York law. The present definition as contained in New York Penal Code Section 225.00is:
1. “Competition of Luck” means any competition, game, game scheme or gaming device in which the outcome depends substantially on an element of chance, notwithstanding that the skill of the contestants may also be a factor.
According to the proposed bill, the text “to a material extent” will be replaced by “predominantly”. It would change the test used in New York law to determine whether an activity is a game of chance or skill, making it easier for contests to be classified as games of skill.
Importantly, this change in the law is not exclusive to the online sphere. Rather, it would have an effect on all of New York’s gambling law and could facilitate the conduct of live poker tournaments and/or cash games even outside of licensed casinos and even if the games are conducted for a profit. Not only that, but other pastimes now considered gambling will have to be re-evaluated in light of the new law and may be re-designated as games of skill.
Future compact capabilities
New York is one of the few states with a population and economy large enough to support a robust licensed online poker economy. Nonetheless, the debate bill provides for New York’s eventual entry into poker traffic sharing agreements, such as the Multistate Internet Gaming Agreement (MSIGA) currently in effect in New Jersey, Nevada, Delawareand Michigan. Part of the bill reads:
10. The commission, by regulation, may authorize and promulgate any rules necessary to implement agreements with other states or their authorized agencies (a) to enable visitors in those states to participate in interactive games offered by licensees under this Article, or (b) to allow visitors in that state to participate in interactive games offered by licensees under the laws of those other states, provided that that other state or an authorized agency applies standards of suitability and review in accordance with the regulations of this article.
Of course, some details will need to be ironed out before New York can participate in MSIGA. In particular, since New York will likely launch with only Texas Hold’em and Omaha poker allowed, some software mechanism will need to be implemented to prevent New Yorkers from accessing other games distributed by out-of-state operators. Nevertheless, New York, with its population of 20 million, would be a welcome addition to the contract and would almost double the size of the interstate player pool.
Wider expansion of gambling is possible
Online poker is just one of the expanded real money gaming offerings at Empire State. State Senator Adabo has already presented legislation that will expand the number of online sports betting licenses from 9 to a full 16, while reducing the tax rate from the current 51%, which some industry experts see as unsustainable in the long term, to 25% in the coming years. He also laid out proposal to install betting kiosks in sports stadiums and arenas. Addabbo is also expected to introduce an online casino bill soon.
Assemblyman David Weprin (D) moved forward account which would allow establishments licensed to sell alcohol (eg bars and restaurants) to host games of “penny poker” alongside cribbage, dominoes and other “entertainment games”. Players will be allowed to bet with each other as long as the establishment receives “no revenue” from such bets.
Earlier this month, the state began accepting applications for three new casinos to be built in the New York area. Times Square, Coney Island, the Saks Fifth Avenue flagship store and Long Island’s Nassau Coliseum have all been named as possible locations for the new casinos. An increased casino presence in the highly visited area of New York City can generate a lot of tourism dollars for both the gaming operators and the state.
NY online poker already exists
Of course, you don’t have to wait for Albany to come together if you want to enjoy online poker from the comfort of your own home. Offshore poker rooms now provide well-tested means of playing online poker in New York and are ready to welcome you through their virtual doors today.
To learn more about this topic, check out this guide to online poker for New Yorkers. If you live in another state, you might be interested in an overview of offshore poker for Americans. These sites are completely legal to play, as explained on this page about US poker legality.