Spotlight on casinos
In his 2012 State of the State address, Gov. Andrew Cuomo unveiled a plan to revitalize upstate New York: Bring in Las Vegas-style casinos.
The governor noted that most New Yorkers could already visit one of many gambling facilities without traveling very far.
“It’s not a question of whether we should have gaming in New York – the fact is we already do,” Cuomo said. “Native Americans have five casinos in New York and we have nine racinos at our racetracks. We don’t fully realize it, regulate it or capitalize on it, but we have gaming. In fact, New York state now has 29,000 electronic gaming machines – more than Atlantic City, and more than any state in the Northeast or Midwest.”
Nearby states and Canadian provinces already allowed casino gambling, the governor continued, raking in revenue New Yorkers would spend closer to home if lawmakers and residents would vote to legalize commercial casino gambling.
Nearly six years later, three commercial casinos are open in New York, with a fourth on the way. While new revenues are flowing into the state’s coffers, they’re below projections. Cuomo was right that many competitors were already at the table – but what he used as a rationale to expand is now proving to be an obstacle as the expansion moves forward.
In this feature on New York’s casino landscape, we spoke with John Bonacic, the chairman of the state Senate Racing, Gaming and Wagering Committee and Gary Pretlow, the chairman of the Assembly Racing and Wagering Committee to get their insights on the expansion and struggles of casinos in New York.
Chairman, State Senate Racing, Gaming and Wagering Committee
C&S: The new casinos aren’t hitting their revenue projections. Why not? Were they too optimistic?
JB: I think they did put rosy projections in when they did their applications for license. But in all fairness, I do think three years is not an unreasonable time to judge them as to whether those projections were valid or not. Let’s say, for the sake of discussion, they don’t meet the projections that they expected. I still think they’ve created private sector jobs. They will have been a magnet for other economic vitality coming into the area – businesses that feed off the resort, that service the resort. And I do believe it’s going to help the tourism industry. So I already think they had a benefit. I know the media keeps writing, “Oh, it didn’t meet the projections,” but I still say it’s a little early.
And the people wanted it! You’ve got to keep that in mind. The people wanted this form of recreation. So I don’t see it as a black eye if they’re not meeting projections now. There’s a lot of good things happening as a result of the three casinos.
C&S: What’s your top priority this year with the Racing, Gaming and Wagering Committee?
JB: I would like to see online gaming, for poker and all. We’ve passed it two years in a row in the Senate and the Assembly hasn’t moved on it, although Gary Pretlow, who chairs the Assembly Racing and Wagering Committee, wants it. But apparently he couldn’t get it through his house and I’m hoping he’s going to be more successful in 2018. So I think that’s important.
And the other thing, and not in the same glitz, is charitable gaming, to allow American Legions and Veterans of Foreign Wars posts to do charitable gaming so they can enhance their revenue. Over half of them have closed. People are not going there anymore. They need a new stimulus to get the people back there spending money. And these were always places where veterans could go or people from the community could go who were lonely and you would have people there to share experiences with, socially.
C&S: In your district, Resorts World Catskills still hasn’t opened. Do we have a timeline? What do you expect from that?
JB: On March 1 of 2018 you have Resorts World Catskills coming in. And that’s the gem. It’s the biggest of the four (new commercial casinos). I’m confident that’s going to be a very successful resort. Because that’s what it is. You know, you’ve got a water park, you’ve got the golf, you’ve got all the restaurants, the spas, the entertainment. And if you ever take a ride up there and look at the facility, it’s a Vegas-style facility. They spared no money in doing it right. Keep in mind that’s private.
And that was one of the reasons over seven years ago that I wanted the chairman of racing and wagering to try and get a constitutional amendment passed to try to bring commercialized gaming to the state of New York, especially the Catskills. And to have a renaissance there, because they need it the most. Over the years, like three generations ago, everybody and his brother’s uncle went to the Catskills to be discovered. But they lost two-thirds of their wealth after the places deteriorated and, you know, it’s a low median income – there’s a lot of poverty, illiteracy. They needed it the most, so I’m hoping that this resort will be a catalyst for other economic vitality.
C&S:Resorts World Catskills is opening, and the state has the option to grant more commercial casino licenses in the coming years. Are you concerned that there are too many casinos?
JB: Let’s face it. There is a saturation of casinos in the United States. There is. Every state wants to put a casino in and gambling revenues. (New) Jersey and Pennsylvania on our borders. Massachusetts, Canada, they’re all around us. So yes, there is a saturation that exists. And there’s always the issue of disposable income for recreation. And if you have high unemployment or people are struggling, they’re not going to be spending their money in the casinos! So yes, that is a trend that is concerning, not only for New York, but all over. Under our constitutional amendment we allowed four (casinos) to get started upstate, and five years later we have three in our pocket to put elsewhere and I think the governor’s intent – and I don’t want to speak for him – but I think he wanted to locate them in the metropolitan area, New York City. But he wanted to give the upstate casinos a headstart to make some money and generate some economic activity and create jobs.
What the Native Americans are doing, they’ll continue to do. Because they don’t want anybody eating their lunch and when they see the three casinos going upstate that it may cut into theirs – they’re doing these little popup casinos like the Yellow Brick Road (Casino) to offset del Lago (Resort and Casino). But they’re a nation, they can do what they want. I’m not concerned with what the Native Americans are going to do.
I do think that the purpose of the three casinos that exist now, we’re accomplishing what we set out to do. These are areas that needed this the most. With the jobs and trying to give a shot in the arm for some economic vitality. So Schenectady, Tioga, Tyre, they all needed it up there and down there. And Monticello, and Sullivan (County), they need it desperately. They’ve lost their wealth from the heyday. So I’m pleased that they’re located in the regions that needed it the most. But there’s a lot of competition for these licenses. They want to put it closer to New York City now, in Orange (County). And to the credit of the (state) Gaming Commission, they said no, we’re going to give it to the people that need it the most. So I was pleased about that.
Chairman, Assembly Racing and Wagering Committee
C&S: You’ve asked state Comptroller Thomas DiNapoli to investigate why the new upstate casinos are not meeting their revenue projections. Why do you think revenues are low?
GP: The revenues that the casino operators projected were all based on what they thought – or they claim they thought – what the actual revenues would be. But I’m of the suspicion that they boosted those revenues and offered more than they should have offered based on the real numbers just to get the license. And then within a year they want to turn around and say now lower the tax rate – more like a bait and switch.
They have not asked yet for a tax reduction. But I’m just assuming that that’s the next step. And they’re going to threaten us with loss of jobs and yadda, yadda, yadda. And I just want to make sure that everything is on the up and up.
C&S: Are there other numbers, other than revenue, that you look at to tell a story about the casinos?
GP: Profit is a function of overall revenue. And based on where that revenue comes from, I’ve always said that table games don’t make a lot of money for casinos. They make their money on slot machines. Every casino in the world makes its money on slot machines. The house advantage on table games is extremely small. They just take a rake from the overall – what’s been bet. So they’re dealing in a high volume because they have to turn so many hands because they’ll say they’re going to make $10 or every hand that is dealt. They only deal two hands in an hour, they’ll only make $20 and if they deal one hundred, they’re going to make a thousand dollars. So that’s why you see in Vegas how quickly they deal. One of the issues I know I noticed at Rivers Casino and Resort – I know the dealers were new there – they were extremely slow. So they weren’t getting the turn they should’ve had, and that could’ve been a part of the problem. They have to learn to deal a lot faster.
C&S: Are there any states with good gambling industries that you look to emulate?
GP: No. I think that New York is in the forefront of casinos. I’m looking from the state’s point of view and not from the casino operators’ point of view. Before we had the commercial casinos open, New York’s general income from the racinos surpassed Nevada’s. And Nevada has dozens and dozens of casinos, but New York was taking in more money in the state than all those casinos combined. So I don’t think I’d want to look at any other state’s operation for New York. We’re in the forefront, and I pride myself on trying to do the best for the state of New York. And of course every dollar that comes in from these casinos and racinos goes to education.
C&S:Speaking about that, Resorts World Catskills still hasn’t opened. Do we have a timeline? What are we expecting from that?
GP: The timeline is theirs! They paid their licensing fee. The quicker they open, the quicker they go into business and start making money. We’re not looking at anything other than a good clean opening. Hopefully, it’s going to be very shortly. The state has no timeline for them to open. They know that in five years, the licensing process is going to open up again and that could lead the way to downstate casinos that will affect their revenues. So they have a five-year headstart and the longer they don’t open, they just close that window a little bit more. So they have to really make their bones, as the expression goes, before the new casinos are allowed to – if we do the licensing.
C&S: The debate ended a year ago and daily fantasy sports was legalized in New York. How’s that going?
GP: There’s revenue for the state.Now it’s regulated and I have heard no complaints from the DFS operators. I’m still looking at some of the other fantasy sport operations like Yahoo and those types and see if we can get some revenue out of them also.