New York State Senator Bonacic Takes Another Crack At Legalizing Online Poker

The bill, S 3898, was introduced on Jan. 27 and referred to the New York Senate Racing, Gaming and Wagering Committee. The committee is chaired by Bonacic.

The bill is expected to sail through the Senate – it passed by a 53-5 margin in 2016.

However, the Assembly will be a different story, as I detailed in this column.

What Bonacic’s NY online poker bill does

S 3898 would legalize online poker in the state of New York by classifying certain forms of poker as games of skill.

The bill specifically cites Texas Hold’ em Poker and Omaha Hold’ em Poker as falling into the game of skill category.

S 3898 calls on the New York State Gaming Commission to craft regulations within 180 days of the bill becoming law. The Commission would also be responsible for licensing and regulating online poker, and determining suitability of operators and major vendors.

Baseline regulations

Per the bill, participants must be at least 21 years of age and be physically located in New York state, as is required in neighboring New Jersey.

The bill also calls for appropriate safeguards to:

• protect the privacy and online security of participants in interactive gaming;
• to ensure the interactive gaming is fair and honest and that appropriate measures are in place to deter, detect and, to the extent reasonably possible, to prevent cheating, including collusion, and use of cheating devices, including use of software programs (sometimes referred to as “bots”) that make bets or wagers according to algorithms;
• minimize compulsive gaming and to provide notice to participants of resources to help problem gamblers;
• ensure participants’ funds are held in accounts segregated from the funds of licensees and otherwise are protected from corporate insolvency, financial risk or criminal or civil actions against the licensee.

Licensing and eligibility

S 3898 would authorize the New York State Gaming Commission to grant up to 11 online poker licenses.

Interestingly, eligibility is not limited to land-based casinos in the Empire State, and includes:

• Current licensed operators of video lottery gaming in New York or from states with similar licensing requirements with experience in interactive gaming, or guarantees acquisition of adequate business competence and experience in the operation of interactive gaming.
• Brick and mortar Class III gaming operators licensed by New York or in a state with comparable licensing requirements, or guarantees acquisition of adequate business competence and experience in the operation of interactive gaming.

Operators are able to form partnerships (presumably with existing online gaming operators) in order to meet the eligibility requirements:

“License applicants may form a partnership, joint venture or other contractual arrangement in order to facilitate the purposes of this article.”

Cost of entry

The bill requires licensees to make a one-time payment of $10 million for a ten-year license. This one-time fee is applied towards future taxes owed for a period of up to five years.

Operators would be taxed at a rate of 15 percent on gross gaming revenue.

Interstate agreements on the table

The bill also makes specific mention of interstate online poker agreements:

“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.”