On Tuesday, Jan. 17, 2023, New York State Assemblyman J. Gary Pretlow (D) introduced a bill that would make licensed online poker legal in New York. Pretlow’s legislation, AB1380would explicitly classify certain forms of poker as games of skill, making them exempt from the state’s ban on gambling.
More About the Proposed Bill
The online poker bill would allow the New York State Gaming Commission to issue up to 11 licenses for interactive gaming. Each license would be valid for 10 years and will cost $10 million. However, the $10 million fee can be applied toward a licensee’s tax obligations during its 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 any interest, penalties, fines, and forfeited prizes associated with interactive gaming. The lottery fund is disbursed throughout the state for educational purposes.
Who Can Obtain a License?
Any entity already licensed by New York for video lottery gaming or the operation of a class III gaming facility will be able to apply for a license. The first category encompasses commercial casinos and racinos throughout the state while the second is comprised of tribal casinos.
However, license applicants must have “experience in the operation of interactive gaming by being licensed in a state with comparable licensing requirements֨.” This at first seems to narrow down the range of potential igaming operators to those that both have a brick-and-mortar presence in New York and also manage online gaming endeavors in other states.
Reading the text closely, though, we see that applicants are allowed to instead pledge to acquire “adequate business competence and experience in the operation of interactive gaming,” leaving the door open to agreements with organizations that do have the required interactive gaming experience. Strengthening this interpretation is the fact that the bill specifically mentions that applicants may use “a partnership, joint venture, or other contractual arrangement” in order to pursue their license responsibilities.
Though the number of licensees is capped at 11, each of them is permitted to run multiple gaming platforms as long as each platform is approved by the Gaming Commission. This means that we could see multiple skins of a single site created for branding, marketing, or other purposes.
What Games are Allowed?
Texas Hold’em and Omaha poker are the two specific games considered “authorized games” within the bill together with “any other poker game that the commission determines is the material equivalent of either of those, 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-vs-house casino games. The status of other poker variants, like Seven Card Stud or Five Card Draw, is unclear, but as they are not really equivalent to Omaha or Texas Hold’em, they’re probably not allowed.
According to section 5 of Pretlow’s proposed bill, “This act shall take effect on the one hundred eightieth day after it shall have become a law.” During this 180-day timeframe, the Gaming Commission will be tasked with establishing regulations and awarding the licenses.
Albany isn’t exactly known for the swift pace with which it gets things done. Still, once legislation has been approved, implementation tends to go relatively quickly for a state of New York’s size. For instance, mobile sports betting was OKed as part of the state’s budget bill on April 18, 2021, and the first NY online sports betting apps rolled out on Jan. 8, 2022: a turnaround of a little less than nine months.
This means that should AB1380 become law, we could see online poker go live as early as the fourth quarter of 2023. All the stars would need to align perfectly for this to happen; a more realistic target date would be sometime in 2024.
Sports Betting Success Makes Online Poker Law More Likely
Assemblyman Pretlow has been attempting to make regulated online poker a reality in New York for a while now. In almost every year from 2014 till today, he has introduced legislation to make this happen often in conjunction with his State Senate colleagues John Bonacic (R) and Joseph Addabbo (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 foreseen. The nine licensees together combined for $16.193 billion in handle during 2022, generating $1.359 billion in gross gaming revenue. With the hefty 51% tax rate in effect, this translated to $693.124 million for the state’s coffers. By comparison, New York’s 11 brick-and-mortar sportsbooks combined for a relatively anemic $95.6 million in handle over the same timeframe.
These figures make it clear that online betting is the way forward, and legislators who were formerly doubtful of the revenue potential for internet poker may be rethinking their stances after seeing the sports betting stats. With tribal casinos, commercial casinos, and racetracks all provided for in the new legislation, it’s hard to see any significant opposition coming from preexisting gambling interests.
Skill Versus Chance
Let’s discuss for a moment the skill versus luck debate as it pertains to online poker. Pretlow’s bill cites the decision in US v. DiCristina where Federal Judge Jack B. Weinstein ruled that poker was a game of skill. The bill also states that Texas Hold’em and Omaha “are considered to be complex forms of poker which involve player strategy and decision-making and which pit the skill levels of the players against each other. As games of skill, these forms of poker do not fall under the definition of gambling as prohibited by the penal law.” There’s one major legal change that this bill calls for that many have overlooked. It would alter the existing definition of “contest of chance” in NY law. The current definition, as contained in the New York Penal Code section 225.00is:
1. “Contest of chance” means any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.
According to the proposed bill, the text “in a material degree” would be replaced by “predominantly.” This would change the test used in NY law to determine if an activity is a game of chance or skill by making it easier for contests to be classified as games of skill.
Importantly, this change in the law is not exclusive to the online realm. It rather would have an effect on all of New York gambling law and could make it easier to run live poker tournaments and/or cash games even outside of licensed casinos and even if the games are being run for a profit. Not only that, but other pastimes that are now considered gambling would have to be reevaluated in light of the new law and might be redesignated as skill games.
Future Compact Possibilities
New York is one of the few states with a population and economy large enough to support a robust instate licensed online poker economy. Nevertheless, the bill up for discussion makes provision for the possible entry of New York into poker traffic sharing compacts, like the Multi-State Internet Gaming Agreement (MSIGA) currently active 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 authorized agencies thereof (a) to enable patrons in those states to participate in interactive gaming offered by licensees under this article or (b) to enable patrons in this state to participate in interactive gaming offered by licensees under the laws of those other states, provided that such other state or authorized agency applies suitability standards and review materially consistent with the provisions of this article.
Of course, certain details would have to be worked out before New York could participate in the MSIGA. Notably, because New York will likely launch with only Texas Hold’em and Omaha poker allowed, some software mechanism would have to be implemented to prevent New Yorkers from accessing other games spread by out-of-state operators. Nevertheless, New York, with its population of 20 million, would be a welcome addition to the compact and would almost double the size of the interstate player pool.
Broader Gambling Expansion Possible
Online poker is only one of the proposals for expanded real money gaming in The Empire State. State Senator Addabbo has already introduced legislation that would expand the number of online sportsbook licenses from 9 to as many as 16 while reducing the tax rate from the current 51%, which some industry pundits believe is unsustainable in the long term, to as low as 25% in the coming years. He has also put forward a proposal to install betting kiosks at sports stadiums and arenas. Addabbo is expected to introduce an online casino bill shortly too.
Assemblyman David Weprin (D) has put forward a bill that would allow establishments licensed to sell liquor (e.g., bars and restaurants) to host “penny poker” games along with cribbage, dominoes, and other “recreational games.” The players would be allowed to wager amongst themselves as long as the establishment does not receive “any proceeds” from such betting.
Earlier this month, the state began accepting applications for three new casinos to be built in the vicinity of New York City. Times Square, Coney Island, the Saks Fifth Avenue flagship store, and Nassau Coliseum on Long Island have been named as possible sites for the new casinos. An increased casino presence in the heavily visited NYC area could capture a lot of tourist dollars both for gaming operators and the state.
NY Online Poker Already Exists
Of course, you don’t need to wait on Albany to get its act together if you wish to enjoy online poker from the comfort of your home. Offshore poker rooms already provide a well-tested means of playing NY online poker, and they are ready to welcome you through their virtual doors today.
To learn more about this subject, check out this guide to online poker for New Yorkers. If you reside in some other state, then perhaps you’d be interested in an overview of offshore poker for Americans. These sites are fully legal to play at as explained on this page about USA poker legality.