NY Senate Downstate Casino Plan Offers Slight Edge to Existing Racinos


Posted on: March 24, 2021, 03:49h. 

Last updated on: March 24, 2021, 03:49h.

A provision to issue up to three downstate casino licenses in the New York Senate’s version of the 2021-22 budget bill would give a slight “speed-to-market” preference for operators that can expedite the opening process. That factor seemingly would benefit the Empire City Casino and Resorts World New York City, the two existing racinos in the region.

New York Casinos
A measure in the New York Senate’s budget proposal would give both Resorts World New York City and Empire City Casino a slight preference when it comes to considering what applicants the state would choose for up to three commercial casino licenses in the New York City area. (Images: Resorts World/MGM Empire City)

In an interview with Casino.org Tuesday, state Sen. Joseph Addabbo Jr., D-Queens, said senators made the change to the spending bill after Gov. Andrew Cuomo’s proposal called for the state to release a request for information solicitation on the proposed casinos this year.

That would not generate revenue both the state and New York City area needs, said Addabbo. The Senate Racing, Gaming, and Wagering Committee added the Assembly took out Cuomo’s RFI proposal completely.

I think that’s a lost opportunity for a billion dollars of guaranteed revenue in a fiscal year where they certainly need it,” Addabbo told Casino.org. “So what we did was, we inserted language that basically forms the framework of a competitive process with a timeframe that recognizes this revenue this year.”

In the Senate’s budget, S2509B, the New York State Gaming Commission would issue a call for proposals for the downstate licenses on or by July 1. It would make a decision on awarding licenses within 150 days of receiving applications.

Chosen applicants would pay a licensing fee of at least $500 million within 30 days of the award.

Casino Scoring Metric Tweaked

The law calls for gaming commission officials to score casino license applications on three factors. Currently, an applicant’s economic activity proposal would make up 70 percent of the score. The local impact makes up 20 percent, and workforce enhancement makes up 10 percent.

Under the Senate’s plan, economic activity factors would now make up 60 percent of the score. The remaining 10 percent would be based on if it “can demonstrate an ability to commence gaming operations more quickly relative to other applicants, in the interest of making revenue available to the state in an expeditious manner.

Both Resorts World and Empire City currently operate racinos with video lottery terminals and electronic table games. Receiving a full-fledged casino license would enable them to offer live table games and upgrade to slot machines.

The state would also receive more tax revenue. The plan calls for downstate casinos to pay an annual fee of $750 per machine or table game. According to the American Gaming Association, that fee is not assessed at racinos. That’s in addition to taxes on gaming revenues the casinos generate.

As racinos, both have significant structures already built. However, both likely would propose new construction to build out a resort on their property, Addabbo said. That would still mean the creation of thousands of construction jobs and permanent resort jobs as well.

Addabbo, though, said that Empire City and Resorts World getting licenses is not a fait accompli. The solicitation will almost assuredly draw interest from all major gaming operators.

“This is not giving it to them,” the senator told Casino.org. “This is just an extra point system… Now, the idea here is we can do one, two, or three licenses, but this is a framework in which we start the negotiation process.”

Addabbo Sees Need for Revenue Now and Later

Under current state law, New York cannot issue downstate casino licenses until 2023. Lawmakers made the move years ago to give the four upstate commercially licensed resorts a chance to establish themselves before the New York City casinos opened.

Over the past year, though, the COVID-19 pandemic decimated the city and state. As a result, the state received $12.5 billion in direct aid from the American Rescue Plan. Before that, Cuomo and lawmakers were looking at making significant program cuts and tax increases to balance the 2021-22 budget.

While it’s a significant windfall, Addabbo cautions that it’s “not a birthday gift” for the state. Officials can’t bank on more federal stimulus funds to make up for lost economic activity during the pandemic.

“I think we all agree the negative economic impact of the COVID pandemic is not limited to the year 2020 or 2021,” he said. “We’re going to feel the effects of this certainly going into 2022, possibly 2023.”

Having those casinos in place within the next year or so would generate revenue the state needs, he said.

While Addabbo is optimistic, his gaming colleague in the Assembly has cast doubts on the plan.

Assemblyman Gary Pretlow, D-North Vernon, chairs the Racing and Wagering Committee in that chamber. He told Spectrum New York’s Capital Tonight on Monday that he supports transitioning Resorts World and Empire City to full casino resorts. However, he said there’s concern about what might happen with the third license and legal issues regarding the plan.

While they may not see eye-to-eye on the downstate casinos, for now, the two did pen the mobile sports betting language that’s in both chambers’ budgets, giving some confidence that plan will become reality when the final bill is passed by the end of the month.

MGM, Resorts World Ready to Bid

Both MGM Resorts International and Genting Group have expressed interest in expanding their current facilities. MGM operates Empire City in Yonkers, while Genting operates Resorts World.

Last month, the two downstate racinos commissioned a poll by Global Strategy Group that found 70 percent of registered voters in the state support allowing them to become full-fledged casinos.

In a statement, an MGM Resorts spokesperson said they were pleased to see the Senate’s casino plan in its budget.

“MGM Empire City can play a meaningful role in New York’s economic recovery by supporting thousands of well-paying jobs, generating hundreds of millions in short and long-term revenue for the state through a full-scale casino and mobile sports betting licenses and ongoing tax revenue, and recapturing gaming dollars that currently are leaving New York only to be spent in neighboring states,” the spokesperson told Casino.org.

Resorts World has not taken a position on the Senate’s budget. However, Michelle Stoddart, the vice president of community development for Resorts World NYC said allowing the racino at Aqueduct to become a full-fledged resort would provide “unparalleled long-term prosperity” for New Yorkers.

Over the last decade, Resorts World has contributed $3 billion in funding for the state’s public schools.

“We are prepared to compete for one of these casino licenses, and if we win, we can get New Yorkers back to work immediately, helping to urgently fill an unmet need in our community,” Stoddart told Casino.org. “Over the past 10 years, we have delivered on our promise to create good-paying union jobs with strong healthcare benefits… Even when COVID-19 hit, we kept pushing forward with ways to grow employment opportunities at our site and proudly expect to provide hundreds of new jobs with the opening of our new hotel on the property this summer.”

New York Budget Deadline Looming

Lawmakers and the Cuomo Administration face a tight deadline. The new fiscal year starts on April 1. Lawmakers must pass the budget, and Cuomo must sign off on it by then.

Addabbo serves on the economic development budget conference committee. He said he did not know for not sure when the group will meet next.

“It has to be soon… my guess is before the end of the week,” he said.