The New York Penal Law § 225.00 defines gambling as staking or risking “something of value upon the outcome of a ‘contest of chance’ or future contingent event not under [your] control or influence, upon an agreement or understanding that [you] will receive something of value in the event of a certain outcome.” N.Y. Penal Law § 225.00.

A “contest of chance” is defined as “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.” N.Y. Penal Law § 225.00.

The law excludes certain authorized activities such as state-run lotteries and licensed casinos and horse racing from this criminal definition of gambling.

In New York State, gambling is regulated via a combination of criminal law, regulatory statutes, and constitutional provisions.

While the New York State Constitution of 1894 Article I § 9 expressly prohibited all gambling in the State, subsequent amendments to the Constitution have whittled away at this blanket prohibition (see History, above). Currently, as a result of Constitutional Amendments, New York allows: Pari-mutuel betting on horse races (1939); State-run lotteries (1966); charitable gaming (1988); and commercial casinos (2013). Furthermore, the Constitution authorizes municipalities to authorize, by a majority vote in an election, certain games under state control such as bingo or lotto games based upon randomly drawn numbers or symbols.

Broadly speaking, New York Penal Law § 225 defines and prohibits promoting gambling, possession of gambling records and devices, professional gambling, and gambling offenses such as unlicensed games of chance. It also contains some exceptions to these sweeping prohibitions.

The New York Racing, Pari-Mutuel Wagering and Breeding Law (NY-RPMWBL) is one of the most important bodies of law governing legal gambling in New York State. The law encompasses various gambling related industries via multiple articles, each covering specific areas of legalized wagering, and is enforced by the New York State Gaming Commission (‘NYSGC’). The legislation outlines the processes for licensing, taxation and revenue distribution, and responsible gaming requirements. One area covered by the law is pari-mutuel wagering, which is a form of wagering where all bets are pooled, and payoff odds are determined by sharing the pool amongst the winning bets. It governs thoroughbred, quarter horse, and harness racing, Off-Track Betting (OTB) corporations and the licensing of racetracks, owners, jockeys, and trainers. A second area covered by the legislation is fantasy sports contests, as regulated and licensed by the Gaming Commission. Operators, like FanDuel and DraftKings, are subject to rules on age verification, game fairness, and the prevention of insider participation. Another area covered by the law is commercial Destination Resort Gaming. Up to seven casinos, with three currently located in upstate New York and one on Long Island, are authorized by the law. The application process is overseen by the NYSGC and the Facility Location Board and subject to the approval of the U.S. Department of the Interior. Both the Seneca Nation and Oneida Nation each operate casinos at 3 locations and the St. Regis Nation operates 1 casino.

The New York State Lottery for Education Law establishes a state-run lottery, the net proceeds from which are applied exclusively for the purpose of funding the education of children in the state. The law creates the Division of the Lottery within the NYSGC, dictates licensing requirements, and outlines the rules surrounding video lottery terminals.

The Game of Chance Licensing Law allows certain nonprofit organizations to raise money through games of chance like raffles. It requires strict regulation, licensing, and enforcement of these games. The law enforces the previously discussed constitutional mandate to prevent commercialized gambling and to protect against criminal influence and misuse of funds.

The Bingo Licensing Law and The Bingo Control Law declare that bingo may only be conducted by nonprofit organizations and that all bingo activities must be strictly licensed and regulated. This implements the previously discussed constitutional amendment reinforcing that the only legitimate justification for allowing bingo in New York is to raise money for nonprofits and not to commercialize gambling. Exempt from these constraints, bingo operations on Native American land are authorized by Federal law pursuant to the Indian Gaming Regulatory Act (‘IGRA’).

Additionally, several administrative rules have been adopted under The New York Codes Rules Regulations (‘NYCRR’) Subtitle T. New York State Gaming Commission. These rules provide guidance on several areas, from horse racing to the lottery to video lottery terminals.

While not New York specific, the federal IGRA applies to tribal casinos operated under compacts between the state and Native American Tribes, such as the Seneca, Oneida, and Mohawk Nations. It establishes three classes of gaming, each with different rules. Class I refers to traditional tribal games and is regulated solely by the tribe, Class II refers to bingo, pull tabs, and certain card games and is regulated by the tribe and the National Indian Gaming Commission, and Class III refers to slot machines, table games, and sports betting and requires a State-Tribal Compact. While NY can negotiate compacts with the Tribes, it cannot unilaterally regulate Tribal Gaming by Federal Law. The ultimate authority governing Indian Gaming facilities rests with the National Indian Gaming Commission (‘NIGC’).

Gambling in New York state is regulated by a combination of state, federal, and tribal authorities depending on what type of gambling is involved. Regulatory bodies include the NYSGC, the National Indian Gaming Commission (‘NIGC’), Tribal Gaming Commissions, the U.S. Department of the Interior (‘US DOI’), and the Attorney General and local District Attorneys. Secondary oversight bodies include the NY Department of Taxation and Finance, the NY Comptroller’s office, and local governments.

The NYSGC is the primary state regulator for legal gambling. Its responsibilities encompass regulation and licensing regarding commercial casinos, horse racing and pari-mutuel wagering, video lottery terminals (VLTs), retail and mobile sports betting, the lottery including scratch-offs and Mega Millions/Powerball, and fantasy sports contests. The now defunct New York State Racing and Wagering board which was merged into the NYSGC in 2013 formerly oversaw horse racing and charitable gaming.

In terms of Tribal Gaming, the NIGC is the federal regulator of all tribal gaming and regulated Class II and Class III gaming on Native lands. Each federally recognized tribe in New York has its own gaming commission, which regulates tribal casinos. These include the Oneida Indian Nation Gaming Commission, the Seneca Gaming Authority, and the Saint Regis Mohawk Tribal Gaming Commission. The U.S. DOI approves the gaming compacts between the tribes and the state and enforces the IGRA.

New York Penal Law § 225.00, which covers various gambling offenses, is enforced by both local and state law enforcement agencies. District Attorneys in most counties handle most cases while the Attorney General’s office might also handle larger cases. The Attorney General’s office also enforces consumer protection laws related to gambling.

a. What is the duration of a licence?

Commercial casino gaming facility licenses have a duration of 10 years. Casino key employee licenses are valid for five years. Vendor and supplier licenses are valid for 5 years.

Licenses related to pari-mutuel betting and horse racing have a duration of 1 to 3 years. Participants and employees in the horseracing industry also have annual licenses. VLT licenses remain in force for 5 years.

In terms of charitable gaming licenses, all licenses related to bingo are for the duration of 1 year. For other games of chance, licenses have a duration of 1 year and are good for up to 12 games of chance with no more than 24 games of chance occurring at a singular location within one year.

Sports wagering licenses for sports wagering in commercial casinos are valid for 5 years. Mobile sports wagering licenses have a duration of 10 years. Registration for fantasy sports operators is valid for 3 years.

Tribes do not obtain a license from New York State.  Rather, pursuant to the IGRA Tribes obtain the right to operate gaming operations as a result of negotiations with New York State resulting in a Tribal and State Compact, the duration of which is governed by the terms of the Compact. The duration of tribal gaming New York varies by tribe. The Seneca Nation of Indians Compact had an initial term of 14 years.  Both the Oneida and Saint Regis Mohawk tribe negotiated perpetual terms of operation. The Native American tribes in New York with gaming operations are doing so with approval of the U.S DOI and therefore do not have state-issued licenses with expiration dates — they operate under federally approved compacts, typically lasting 10–20 years or indefinite, depending on the agreement. Both the Oneida Nation and the St. Regis Nation operate pursuant to an indefinite term as agreed upon in their compacts with New York State.  The Seneca Nation had an initial term of 14 years which is currently under negotiations.  During the period of no Compact being in place, the Seneca Nation and NYS have agreed to a temporary extension with the approval of the U.S. Department of the Interior NIGC.

b. What types of licences are available?

In New York, several types of gaming licenses are available to accommodate different forms of gambling and gaming operations. Casino Operator Licenses are issued for commercial casinos, while VLT Operator Licenses apply to racetracks with VLT machines. For sports betting, both retail and online, Sports Wagering Licenses are required. Businesses that sell lottery tickets must obtain Lottery Retailer Licenses from the Gaming Commission. Companies running fantasy sports platforms need to secure Fantasy Sports Operator Registration. Those involved in the horse racing industry must hold the appropriate racing licenses. Additionally, Charitable Gaming Licenses are available for nonprofit organizations conducting bingo, raffles, and similar activities. Lastly, Tribal Gaming Licenses govern operations at casinos managed by Native American Tribes.

c. Are there different types of licences for B2C and B2B operators?

There are different licenses for Business-to-Consumer (‘B2C’) and Business-to-Business (‘B2B’) operators in New York State. Licenses falling under the B2C umbrella are for operators directly offering gambling services to consumers, such as mobile sports betting platforms, fantasy sports providers, lottery agent licenses and commercial casino operators. Licenses falling under the B2B umbrella are for companies providing gambling related products or services to other businesses in the industry such as casino vendor licenses.

d. Do software suppliers need to be licensed?

Yes, software suppliers fall under the B2B licensing category as they are considered vendors providing services to various operators.

Yes, unlicensed and private casino games are prohibited in New York. These include poker, blackjack, roulette, craps and similar games in private clubs, bars, or other unregulated venues. Games such as these are allowed only at licensed commercial casinos and tribal casinos operating under state compacts approved by the NIGC.

Bookmaking or accepting bets on sports outside of licensed retail or mobile platforms is also prohibited. It is legal only though NYSCG licensed sports betting apps or through a licensed sportsbook at commercial casinos. Unlicensed fantasy sports are also not allowed.

Additionally, online casino gaming, such as online slots, online blackjack, online roulette, and other interactive casino games played for real money, are prohibited. Only in-person casino gaming is legal for now, but some lawmakers have introduced bills to legalize Online Casino Gaming, making it something to keep an eye on for the future.

Lotteries and raffles which are not operated by the NY Lottery or a licensed charitable organization are not allowed. Raffles and bingo must be run by authorized nonprofits and licensed by the state and local municipality.

Owning or operating a slot machine, video poker machine, or other similar device in a store, bar, or home is prohibited. It is legal only in licensed casinos, , or racinos with VLTs approved by the NYSGC. Tribal gaming facilities are governed by compact and as approved by the NIGC, operating independently within the US DOI.

While horse racing is legal and regulated in New York, other types of racing such as dog racing are banned. Additionally, wagering by a New York resident on dog races outside of New York is illegal.

The application procedure for commercial casino licenses in New York State is as follows. First, the New York Gaming Facility Location Board will issue a request for applications. Before the Board will review the application, the applicant must prove they have community support by securing favourable votes from a Community Advisory Committee, demonstrate compliance with State and Local Zoning requirements, and pay a $1 million application fee.  Applicants must also demonstrate the financial capacity for a $500 million investment and propose a diversity framework that ensures the advancement of diversity in the workforce and in the ownership and leadership of the business entity itself. Upon award of the license, payment of a $500 million licensing fee is required.

For charitable gaming in New York, the application process for Bingo, Bell Jar, and Casino Nights are all relatively the same. First, entities wishing to conduct these games must register with the NYSGC to obtain an ID number. Then, the entities file the proper forms with the municipality in which the games will be conducted, with Bell Jar and Casino Nights applicants paying a $25 licensing fee while Bingo applicants pay a $18.75 licensing fee. For entities wishing to conduct raffles, there are three categories of applicants based on the anticipated net proceeds. Category 1A raffles, in which net proceeds will meet or exceed $30,000 per calendar year, must file the proper forms with the municipality in which the raffle will take place and pay a $25 licensing fee. Category 1B raffles, in which net proceeds from a single or cumulative raffle will be between $5,000 and $29,000 per calendar year, must file the appropriate forms with the municipality in which the raffle will take place. Category 2 raffles, in which the net proceeds from a single raffle will be less than $5,000, do not apply for a license. Instead, the organization’s principal officers must examine the organizational documents and make a good faith self-determination that the organization is authorized to conduct raffles.

The application process for horse racing tracks, whether for thoroughbreds, quarter horses, or harness racing, is the same. Tracks submit an application to NYSGC to conduct races on the premises and upon approval of the application pay a licensing fee of $100 per racing day during the duration of the license.

Yes, individuals in New York State’s gaming industry need to be licensed. The requirements are detailed as follows.

All individuals participating in the horse racing industry must be licensed by the gaming commission, from owners to trainers to jockeys to grooms. Individuals can complete their applications in person or via mail. Applicants must disclose criminal charges and convictions and must be fingerprinted. Application fees vary by role in the industry from $5-$100 per year. 2 passport quality photos must also be submitted along with the application. Owners, trainers, assistant trainers, drivers, and veterinarians must complete a supplement along with their application.

For commercial casinos, individuals must apply for occupational licenses. Casino Key Employees, who tend to be in supervisory roles with the power to make discretionary decisions, must demonstrate financial stability, integrity, responsibility, and good character. Applicants must also provide their address, criminal history, and fingerprints. Other gaming employees must register with the NYSGC by providing their address, criminal history, and fingerprints.

The NYSGC oversees gambling advertising, including sports-wagering, casinos, and lotteries. Generally, advertising laws can be found under the Racing, Pari-Mutuel Wagering and Breeding Law and the New York Codes Rules and Regulations. Many of the key restrictions on advertising are the same across gaming industries.

Advertisements must not target or feature individuals under the age of 21, the legal wagering age in New York. They cannot be placed on media where minors and college age adults are the reasonably foreseeable majority audience. Particularly, cartoon characters, youthful music, and anything else that would appeal to minors is prohibited in advertisements.

Gaming advertisements cannot have deceptive or misleading claims. For example, an advertisement cannot state that the game is “free of risk” or “cost-free” if there is real money at stake. All material terms and conditions must be clear and conspicuous. Those material terms cannot be concealed in fine print or obscured through the location, type, lighting, or illustration within the advertisement.

Many advertisements are required to include mandatory responsible betting messaging, such as a problem-gambling assistance message. The message must be prominently displayed in the advertisement. Additionally, for direct advertisements, an opt-out mechanism must be included in the advertisements and advertisers must honor the requests within 15-days.

Marketing affiliates are permitted to operate in New York State as long as they are partnered with a licensed casino sports wagering operator or sports pool vendor. The manner of compensation from such agreements cannot violate Racing, Parimutuel Wagering and Breeding Law § 1341(1). There have been pushes for more restrictions on marketing affiliates and downright bans have been proposed. This is an area of law worth watching in the coming years.

In New York State, offering, facilitating, or marketing unlawful gambling is a criminal offense under New York Penal Law Article 225. Penalties range from being charged with a Class A Misdemeanor to a Class E Felony, depending upon the severity of the crime. While playing or placing bets on an individual basis is not explicitly a crime under state law, actions beyond simple participation such as promotion, facilitation, or the use of unlawful devices can lead to criminal charges.

Entities holding gaming licenses in New York State must meet ongoing obligations to maintain their licenses in good standing with the NYSGC. Licensees must comply with all state gaming laws and regulations. No gaming facility can operate without the issuance of an Operation Certificate. Gaming facilities must keep detailed records pertaining to their operations which must be immediately available for inspection during hours of operation. Additionally, all licensees must maintain financial integrity. Generally, individual license holders must maintain good character, integrity, and financial responsibility.

As a baseline, all gaming facility licensees in New York must comply with the requirements of the Federal Bank Secrecy Act pertaining to reportable currency transactions and transactions that are believed to be suspicious. To do so, licensees must establish a system of internal policies, employ an anti-money laundering officer, conduct regular compliance audits, train licensed personnel in reportable currency transactions, assign individuals to monitor day to day compliance, and employ automated compliance programs where needed. Specifically, Currency Transaction Reports must be filed for cash transactions over $10,000. Additionally, Suspicious Activity Reports must be filed when suspicious behaviour is detected.

While the NYSCG does not publish standalone anti-money laundering requirements, there is a general requirement for licensees to prevent illicit financial activity, maintain accurate and accessible records, and report suspicious transactions.

Responsible gambling requirements in NY are designed to prevent problem gambling and promote safe participation in gaming activities. Individuals can self-exclude by registering with the state for a set period of time of up to a lifetime. Gaming operators must have procedures in place to identify and interact with self-excluded individuals by checking player registrations against exclusion lists and not accepting any new deposits from self-excluded individuals. Additionally, operators must ensure that self-excluded individuals do not receive targeted advertisements.

Furthermore, all gaming facilities must develop a problem gambling plan at least 90 days before receiving an operation certificate. The plan must identify the person responsible for implementation and the plan must cover areas such as an employee training program, compliance with the self-exclusion program, distribution of educational printed materials, prevention of underage gambling, and a resource list.

New York law emphasized vetting and suitability of shareholders rather than specific approval thresholds and reporting requirements. For example, applicants for registration for fantasy sports gaming operations must disclose the names and addresses of shareholders with 10% or more equity in the corporation. For business entities other than corporations, the names and addresses of those with 5% or more equity in the company must be reported.

The NYSGC wields comprehensive regulatory and enforcement powers over gaming in the state. This includes the ability to oversee all gaming activities and associated entities, to hear and decide on licensing, registration, certificate, and permit applications and the revocation and renewal thereof, to monitor compliance operations, to conduct investigations and hearings, to ensure compliance with tribal-state gaming compacts, to levy civil penalties and fines, and to refer to a law enforcement agency of the appropriate jurisdiction any evidence of violation of the law. Additionally, through the Office of the Inspector General, the NYSGC enforces accountability within its own ranks, reinforcing the integrity of gaming regulation in NY.

The tax rates for the various areas of gaming in New York are as follows. Gaming facilities in different zones across the state have differing tax rates on gaming revenues. In region two, the tax rate is 45% on slot machine revenue and 10% from all other sources. In region one, the tax rate is 39% on slot machine revenue and 10% from all other sources. In region five, the tax rate is 37% on slot machine revenue and 10% from all other sources, except that in the Tioga County portion of the region, under specific criteria, the tax rate is 30% on slot machine revenue. Sports wagering revenue is taxed at 51%. Racetrack operators are subject to a 0.7% excise tax on all money wagered. The state tax rate is 1.6% on all wagers plus 20% of the breaks.

Lawmakers have been pushing for the legalization of iGaming in New York the past few years, which would allow for several major operators to obtain licenses. Legalizing Online Casinos would allow for slots, table games, and the lottery to be played online. While this effort still faces some political hurdles and lacks gubernatorial backing at this time, an Online Sweepstakes Casino ban has bi-partisan support and appears it may pass in the near future.

A bill passed in the state senate establishing the Problem Gambling Advisory Council, which would be tasked with recommending ways to make problem gambling assistance more accessible throughout the state. While it has not yet passed in the assembly, the bill has support and is expected to pass. Much of the other potential regulatory developments involve making mobile sports wagering and fantasy sports less addictive. Lawmakers propose several ways to do so including banning push notifications and text messages from these operators encouraging patrons to place bets. Another proposed law aims to limit the total amount mobile gamblers can wager each day. This legislation faces some pushback because it would pose difficulties to regulate companies that would benefit from users using their services as much as possible.

None at this time. However, there was a recent crackdown on online sweepstakes casinos illegally operating in the state, along with growing pressure from various groups to ban them entirely. The future of online sweepstakes casinos in New York is currently unclear, and it is important to stay informed about any potential developments.

There are several reasons why a gambling start-up might choose New York State to commence its activities. New York is one of the most populous states in the country, offering access to a vast and diverse customer base with a strong demand for gambling and entertainment options. The legal gambling markets in the state have demonstrated high revenue-generating potential, indicating a favorable environment for expansion, particularly in the casino gaming and sports wagering worlds. New York has clear, albeit strict, gaming regulations which provide much legal clarity and reduce uncertainty for potential businesses that comply with the rules. While all forms of online gaming are not yet available in the state, there are increasing pushes from various groups and public support for expanding online gambling, which could create future opportunities for startups. New York State has historically supported gambling ventures as a way to boost tax revenue and job creation, especially in areas in need of economic revitalization. Operating in New York grants access to a strong ecosystem of financial institutions, technical talent, and potential marketing and media partners which can enhance the growth of any potential startups.