New York Considers Legal Online Casinos as iGaming Momentum Builds

New York became the latest state in 2026 to raise discussions about legal online casinos, marking the third state to do so this week. While Maine’s Governor Janet Mills weighs up the pros and cons of legal online casinos with LD 1164, and down South the lawmakers in Virginia are contemplating setting up a Virginia Gaming Commission, Senator Joseph Addabbo Jr has reintroduced Senate Bill 2614 in New York, and Assemblywoman Carrie Woerner has introduced Assembly Bill 5922.

Both NY bills intend to legalize online casinos and they will include every casino, sportsbook operator, and tribal casino in the state of New York. While the movement is still a long way from being formed and implemented, it seems New York is on a roll. Only a few weeks ago New Yorkers were getting excited about the launch of the new downstate landbased casinos, while the state clamped down on sweepstakes casinos. Now, online casinos are the hot topic.

Maine, Virginia and Now New York

Three states this week have introduced proposals or held talks about legalizing online casinos. Considering the last state to legalize online casinos was Rhode Island back in 2023, and that currently there are only 7 states with legal iGaming, this is quite an extraordinary movement. Maine’s LD 1164, and the fate of the online casino bill, rests on the shoulders of Governor Janet Mills. She has, on previous occasions, shown caution with anything related to gambling, even delaying Maine’s online sports betting bill back in 2020, and the sentiment around Maine’s bill is not as positive as in other states.

In Virginia, there were 2 online casino bills introduced last year, but these were postponed. The reason is that the lawmakers needed more time to study the industry and get a good idea of how to build an iGaming framework for Virginia. But this week, bills were introduced once again to legalize online casinos, and Delegate Paul Krizek put forth a bill that would create a Virginia Gaming Commission.

This is vital to controlling and monitoring the gambling sector across the state, which is regulated by several authorities right now. Sports betting and landbased casinos are regulated by the Virginia Lottery Board, while horse race betting is regulated by the Virginia Racing Commission, and charitable gambling and DFS are under the purview of the Virginia Department of Agriculture and Consumer Services.

But New York is arguably the most influential of the trio. If the state of New York can get the train moving on legalized online casinos in 2026, it has the potential to create a domino effect and give other states reason to explore legalizing iGaming.

What the NY Online Casino Bills Propose

The New York online casino bills propose to legalize the majority of casino games, as well as iLottery products. These are defined as online slots, table games, live dealer games, and poker tournaments, and the bills look to open a proper market, with healthy competition. Instead of limiting the number of licenses, these bills would give all landbased casinos in NY the rights to gain licensure, as well as any online sports betting operators and tribal casinos in the state.

When compared with the iGaming markets of Delaware, Connecticut and Rhode Island, which have 3, 2, and 1 licensed platforms, respectively, New York aims to open a wider market for operators and players alike. It potentially could even rival that of New Jersey, which has over 25 legalized online casinos.

Gaming Licenses and Taxation

The proposals set the cost of these iGaming licenses at $2 million, and for independent operators that want to host their own platforms, they will need to pay $10 million. These online casinos would also have to pay an online casino levy, which is proposed at 30.5% on gross gaming revenue. For context, that is a lot lower than New York’s 51% sports betting tax, but it ranks pretty high when you compare it against New Jersey’s online casino tax, which is 15-17.5%. Pennsylvania, on the other hand, has the highest online casino tax, which is 54% of GGR on slots, and 16% on table games and online poker.

But considering NY is the 4th most populous state in America, after California, Texas and Florida – where online casinos are still illegal – the revenue potential for operators is immense. Should this bill pass, New York will not be left short of suitors who will jump in to seize licenses and service New Yorkers with hot casino games.

New York Gaming Shifts in 2025

A lot has changed in New York in the past few months, and this development could be the icing on the cake to completely reform the state’s gambling scene. The City of New York endured half a year of bids for the three downstate casino licenses, and it provoked mixed reactions. Some entries met with great resistance, such as Jay Z’s Times Square project, where neighborhoods were concerned about the potential traffic and environmental impacts of large scale casino resorts.

Downstate Landbased Casino Licenses

The bids went through the Community Advisory Committees for review, and those that progressed went on to present their applications to the New York Gaming Facility Location Board by December 1. An early favorite to win one of the licenses, MGM Empire City, pulled out of the race as CEO Bill Hornbuckle suggested the license length was contingent on construction costs, and that the market may be overrated.

But the final three, Genting Group (Resorts World NYC), Bally’s (Bally’s Bronx) and Hard Rock International x Steve Cohen (Metropolitan Park), went through the last phase and got the licenses from the New York State Gaming Commission.

NY Ban on Sweepstakes Casinos

New Yorkers are going to have downstate casinos opening in the next few years, and that’s not all that is new.

2025 also saw New York ban sweepstakes casinos. The state issued an outright ban on these dual model sweepstakes casinos back in December, joining Nevada, Connecticut, Montana, New Jersey and California. A lot of sweepstakes casinos had already exited New York prior to the ruling, but with it, the rest followed suit.

Sweepstakes casinos first arrived on the scene in 2019, but the excitement around these alternative online casinos really exploded from 2022 to 2025. They operate through a legal loophole, as they don’t provide casino games for real money. Instead, they have casino-style games that run on virtual currencies (fun currency and sweeps currency), with opportunities for players to exchange the virtual sweeps currency for real money prizes. This way, they are not legally classified as online casinos, and so sweepstakes casinos could operate with no iGaming license and cater to players in virtually every state across the US.

That is, until states slowly started banning these gaming platforms, and New York banned them after months of legal battles at the end of 2025.

Why Are States Turning to iGaming Now

Don’t be surprised if this iGaming legalization catches on in more states this year. It seems like, finally, the US lawmakers seem to have loosened their stance on iGaming and more are getting behind the notion of legalized online casinos.

There are multiple reasons why this may be so. Online sports betting was legalized at the federal level back in 2018, and since then, it has caught on like wildfire. Missouri became the 39th state with legal online sports betting in December of last year, and there are still other states that are drafting bills and holding discussions about potentially launching their own markets.

But it is also fueled by the turn in the tide for sweepstakes casinos in the US. After California’s very public ban on sweepstakes casinos, a lot of states matched the efforts with cease-and-desist letters and legal action against sweepstakes casinos.

The Logical Next Step for Authorities

Most states now have gaming commissions or control boards, set up to manage the online sports betting markets. They also have experience regulating online gambling and have discovered the massive potential for revenue through taxation. Now there may be only 7 precedents for online casino gambling, but as most states already have legal online sports betting, they can use the experience and know-how obtained by regulating those products to turn their attention to online casinos.

Legalizing online casinos doesn’t happen overnight, and even if the bills are accepted in some or all three of the states, it may take a good year before they actually launch their own online casino markets. But it doesn’t take away from the fact that these bills are on the table, and the spotlight has finally swung from online sports betting to online casinos in the US.