Bringing in billions for the state’s education system

J. Gary Pretlow was first elected to the Assembly in 1992 and was named chair of the Assembly Ways and Means Committee in December after leading the Racing and Wagering Committee for 14 years. During Pretlow’s tenure, he passed video lottery terminal legislation, presided over the expansion of new casinos in the Catskills, Southern Tier and Capital Region, and jump-started the process to award three new full casino licenses downstate. Pretlow also helped authorize mobile sports betting, which brought $2.6 billion in revenue for the state’s education system over the past three years. This interview has been edited for length and clarity.

You just relinquished your role leading the Assembly Racing and Wagering Committee. What were your biggest accomplishments while leading that committee? 

That’s difficult to quantify. The biggest was the (video lottery terminal) legislation. With that, we saved the racing industry. We saved 30,000 jobs and tens of billions of dollars to education over the past several years. That would be the biggest accomplishment, since we did so much. And all that money was not at taxpayer expense. People for the most part enjoyed giving the state money for education.

Second would be sports betting, even though we had a hard time getting it done. The former governor was explaining it was unconstitutional before saying it was constitutional. I guess when he saw the money that could be made, he changed his mind.

Although you’ve now moved up to lead the influential Assembly Ways and Means Committee, will you still have a hand in casino and betting policy? I see you no longer have a seat on the committee, though your district is very close to the Empire City Casino in Yonkers, of course. 

I don’t think I’ll have any direct responsibility, but I’m sure the new Chair Carrie Woerner will ask me questions. And of course since it has fiscal implications it will come into this committee. I do not have a seat on the committee still. Only on the Rules Committee and Ways and Means.

The bids for one of up to three downstate casinos will be due this summer. When do you think casino bids will actually be awarded? Is there a set timeline for those decisions to be made? Do you anticipate any more delays?

I don’t think anything with regard to casinos in that respect will happen before the end of 2025 in December. The Gaming Commission has indicated that they put a ruling that they would be doing the awarding by the end of 2025. So (with) the 2025-2026 fiscal year coming up, it won’t be until the end of the second quarter (or the) third quarter.

They’ve delayed enough, I think they’ve run out of delays and the state does need the revenue. I don’t think there will be more delays. There are several entities still in the running vying for this. They’re all ready to go. Every one of the entities is ready to go, so the only delays we have now are on the state’s half. The Gaming Commission took over a year to answer questions. I don’t foresee any future delays.

The common wisdom has long been that two existing racinos, Empire City Casino by MGM Resorts in Yonkers and Resorts World New York City in Queens, are favorites to win full-fledged casino licenses. Do you think that’s the case?

There’s always the possibility that you’ll see something else, but I don’t know the probability of that. Entities have to indicate an expenditure of half a billion dollars to qualify for the license and both those entities have already done that, so they’re starting off ahead of the game. Prior to the constitutional amendment, the thought was that those two entities would be highly viable for a casino license. I still think that’s the case. It’s not a slam dunk. It depends on the quality of their application and background checks but both entities are proven casino operators, and I don’t think they’ll have any issues in that regard.

How confident are you overall in the process that’s been set up this time around? What are some of the characteristics that might put certain bids over the top compared to the others? 

I don’t believe housing will be a swaying issue. Everyone is offering to build housing as part of (their) application. I know Genting wants to build workforce housing in Brooklyn. One of those plans is underwater now. It’s up to the Gaming Commission. It’s out of my hands.

The upstate casinos authorized in the previous licensing cycle have failed to live up to economic projections? Why? 

I personally didn’t agree with the former governor’s idea on the upstate casinos. When I first did the constitutional amendment, I envisioned more downtown Vegas and the governor envisioned the Strip. The Strip really doesn’t work upstate and a lot of entities were forced to spend a lot of money on amenities that the area couldn’t support.

Monticello, for instance, spent about a billion dollars up there in a town with 5,000 people. You can’t expect to make a profit without some interaction with the locals and if there’s only 5,000 locals, you’re never going to make it. It’s 90 miles from New York City, but it’s still a hike to get there.

They all overestimated because they wanted to ensure they got the license. They offered a higher tax rate. The state didn’t tell them a tax rate. They told us what they were willing to pay, they came up with projections about what the revenue was going to be. They overextended themselves on the credit market, they borrowed money. They weren’t losing money, but they weren’t making what they were expecting to make.

So they came back to the state and asked for a tax cut. The only one who didn’t ask was Jeff Gural at Tioga. He didn’t spend a lot of money and opened a day care. He had his tax rate lowered and he’s happy. The others are happier, but they aren’t doing what they projected because they don’t have the population base to support it.

What can the state do to make sure that the local population can benefit from employment at the sites that win the full casino licenses?

Well the state doesn’t have to do anything to ensure that. By virtue of their location, the local people will be in the market to be hired, that’s evidenced at the two existing racinos: MGM and Genting. Most of the people who work there are from the neighborhood and are local people. The same holds true in Yonkers. The location is not as populated, but I consider them local people. Wherever the new casinos go there will be a vast amount of job opportunities for local residents.

What are the revenue expectations for three downstate casinos? Is there any official state projection? What is the range from some of the existing bidders you’ve seen?

The state does not have revenue projections. Each of the entities bidding have their own projections. I wouldn’t believe any of them. They’re going to be over exaggerated as the previous round, but I do believe they’ll be very high. If it’s close to Manhattan, it will be one of the most lucrative casinos in the world.

Bringing your past and current chairs together, what impact will three downstate casinos have on the state budget? Where would the new casino revenue go?

I will put the onus on you to do the math, but fact No. 1 the minimum licensing fee is $500 million. All three licenses is a minimum (of) $1.5 billion to the state. All three entities said they would hire 5,000 individuals, so that’s 15,000 new hires at an average salary of $50,000. Take 15,000 times 50,000 at 5%, and that’s the projected income tax.

And the casinos themselves will make revenue. If they do anything near what I think they’ll be doing, if you add those up together you’re looking at a few billion dollars in the state budget.

Education will be held harmless and the rest of that income will go toward the MTA to help alleviate the stresses on the subway and bus system in New York City. Right now, education gets money from the racinos because the machines at the racinos are VLTs. If those two racinos become casinos, they will no longer have VLTs, they will have slot machines. There’s no mandate that slot revenue would go toward education. So the money currently going could be curtailed, but the legislation we did ensures that education gets what they’re getting now and the rest will go toward MTA.