New York Governor Will Use Casino Tax Revenue to Help Transportation Crisis

New York Governor Kathy Hochul plans to use revenue from casinos to help the state’s struggling Metropolitan Transportation Authority (MTA).

Hochul shared her intent Wednesday during the reveal of a 2024 budget plan. The MTA, which includes the state subway and bus transits, is down roughly 40% on pre-pandemic levels, and could receive an extra $1.3 billion in attention.

Hochul is also planning to hike taxes on businesses and boost funds from New York City, all to help the MTA get the extra $600 million it needs to balance its books this year.

The pandemic put many business operations into fight-or-flight mode. Without surprise, the travel industry was one of many that suffered and have been extremely slow to bounce back to where it was in 2019.

The MTA faces a potential $1.2 billion deficit in 2024, which could balloon to $1.6 billion in 2026. Hochul recognizes the seriousness of the MTA failing to get its house in order, given its importance to New York’s infrastructure.

“For many New Yorkers, the MTA is the lifeblood,” said Hochul. “And if we do not continue to invest in that, we will not be looked upon favorably by future generations.”

MTA Chairman Janno Lieber has campaigned for extra funding for the agency for well over a year. Part of the new plan will allow the MTA to postpone massive layoffs it would otherwise have to make if it did not receive a financial stimulus.

According to Hochul’s plan, a portion of that funding will come from casino license fees and tax revenues. The exact amount and time depend on the type of license the casino is in possession of and is not expected to go into effect until at least 2026.

Granting three casino licenses could generate $1.5 billion for the MTA up front. Only casinos within the MTA’s operational radius will be made to give money to the agency.

The tax rate for these casinos has not been decided, but a study by Spectrum Gaming Group concluded that yearly tax returns could be anywhere from $462 million to $826 million.

There are many skeptics of Hochul’s new plan, specifically her intent to reroute tax funding from casino licenses to the MTA.

“[Redirecting tax funds] undoes all of Hochul's insistence during the campaign that the state would pay for extra [subway] policing costs," said Manhattan Institute research analyst Nicole Gelinas. "Now, the state is taking that money—about $200 million a year—and then some.”

Of course, part of getting extra funding from local casinos is contingent upon those casinos opening. The state has been flirting with the idea of adding downtown gambling centers to its list of attractions but is yet to formally accept any license applications.

There are also concerns that Hochul’s plan contradicts the very law state voters weighed in on when they legalized casinos in 2013, which said casinos had the “legislated purpose of… increasing aid to schools.”

However, Hochul claims that this process is unaffected by the decision to help out the MTA. She also said that she wants “efficiencies” to help save money, which drew criticism from a local union that represents a large chunk of the agency’s employees.

There is already a 51% tax on legal sports betting revenues in New York, which is expected to generate $646 million in funding in the upcoming fiscal year.

Lawmakers are yet to debate the topic of online casinos, which are illegal in New York but could provide more tax funding if approved. The state is already the country’s online sports betting leader, so it is not hard to imagine that it would also produce a thriving online casino community.

The deadline for the upcoming budget is April 1, which gives policymakers less than two months to find a solution.