As Casino Expansion Gears Up, Little Appetite For Online Gambling In New York
In the weeks after voters approved a referendum to legalize casinos across New York, a top Cuomo administration official reportedly met with a lobbyist connected to the gambling website PokerStars.com. With casino seeds freshly planted in New York, long a fertile ground for expansion, that single meeting may have been insignificant—but in the casino world, the idea of online gambling is anything but chump change.
There is currently a battle ongoing between casino industry titans over the digital presence of the world’s top casino brands. On one side is Sheldon Adelson, the billionaire 80-year-old CEO of Las Vegas Sands Corp. On the other are casino giants like Caesars Entertainment Corp. and MGM Resorts International.
Adelson and his allies, wary of the effect online gambling could have on physical casinos, do not want to see it legalized on a national scale. But executives on the other side say that if online gambling is regulated, it is just another boost to their own bottom lines.
Although the state has a number of Native American casinos and limited racetrack casinos, New York is still new to the business of full-fledged casinos. And while talks are heating up about where those castles of cash could go, the idea of online gambling has been more of an afterthought. But is it plausible?
In November New Jersey became the third state in the nation to allow online gambling, joining casino-rich Nevada and Delaware. But while Atlantic City has had a long-standing reputation as a Northeast mecca for gamblers, online gambling has yet to pan out. In its first five weeks, online gambling brought in a relatively paltry $8.4 million, far off the pace that would give New Jersey the $1.2 billion officials projected by the end of June.
With a neighboring state’s online outlets— websites run by Atlantic City casinos— underperforming, one industry analyst suggested that New York would be wise to hold off on rolling the dice for now.
“I don’t see the reason for New York to allow online gambling,” said Alan Woinski, president of Gaming USA. “I don’t see where they benefit. If they’re going to do it as an amenity, that’s one thing, but it’s not going to be a revenue generator.”
The problem Woinski sees with online gambling is the selection of games. The more popular sites are for poker—a game Woinski said does not bring in the big money for traditional casinos. Generating money online is a matter of taking a brick-and-mortar casino and offering it entirely online, he said.
In New Jersey, that has posed a problem. Woinski said some websites offer slots, but because casinos are going through offshore providers for their websites, the games are unfamiliar to players, which makes them unappealing. Woinski added that online gambling is largely for the players who haven’t set foot in a casino in some time.
“A lot of people just don’t trust a computer,” he said. “I know friends of mine who … played poker online when it was in the gray area of states before it was actually declared illegal. They go on the sites now and they tell me it’s rigged. They don’t trust it.”
Even though the sites are legitimate, Woinski said, play can be unpredictable and erratic since online players “do things they wouldn’t do if they were playing for big money. … So it looks to them like it’s rigged.”
Even if online gamblers aren’t playing for big money, advocates say there is big money to be made by legalizing online gambling, despite the disappointing haul states like New Jersey have generated so far. According to the American Gaming Association, Americans spend an annual average of roughly $3 billion on overseas gaming websites, and federal legalization could mean 22,000 jobs and more than $26 billion in tax revenue.
Advocates are largely focused on federal legalization of online gambling, though, and even their attempts to use New Jersey, Delaware and Nevada—the only three states to legalize the practice—as examples might not hold much weight. The American Gaming Association calls New Jersey’s revenue and participation positive, but says results have been mixed in Delaware and inconclusive in Nevada.
There has been little public discussion about online gambling in New York since the November casino referendum passed. The enacting legislation does not mention online or website-based gambling. And despite the November meeting with the PokerStars lobbyist, a Cuomo spokesperson said this month that the administration does not have a position on online gambling. PokerStars did not respond to an interview request.
State Sen. John Bonacic, the chair of the state Senate Racing, Gaming and Wagering Committee, said in a statement that at this point online gaming discussions are premature, since all five members of the Gaming Facility Location Board have yet to be named and the request for applications for resort destination casinos has yet to be issued.
“The first priority is to have these resorts built in order to create jobs, spur economic development throughout the state and generate increased revenues for education, property tax relief and aid to local governments,” Bonacic said.