If New York City opens casinos, the impact might be positive for NY’s upstate casinos.

While we're all enjoying the convenience of our favorite online casino, Grande Vegas online casino, many of New York’s upstate land-based casinos reported that their 2018 earnings fell below early projections. Yet the operators believe that their revenues will increase this year, especially if the moratorium on New York City-area gambling licenses is lifted. 

The seeming-contradiction of building the casinos’ own business by strengthening the competition seems difficult to understand. Nevertheless, powerful downstate casino giants are working with state leaders and the upstate casinos to affect exactly that. They believe that, by making it easier for gamblers to play at casinos in the New York City area, upstate casinos will thrive.

In fact, the NYC-area casino developers are so convinced of that scenario that they are each offering $500 million to the state for casino licenses, dependent on the state dropping its ban on new casinos before 2023.

If the downstate casinos are allowed to open, the mega-operators say, the new revenue from those NYC casinos will enable the upstate casinos to renegotiate their tax rates with the state since as a whole, the industry would be able to bring in more revenue for the state. This will save the struggling upstate casinos from the type of financial collapse that they are presently facing.

Casino Operators

Ron Reese, a spokesman for Las Vegas Sands Corp., one of the casinos that is seeking a casino license in the city, said "One of the first conversations we had was with several of the upstate operators who under this scenario where they could potentially get some tax relief and see part of their license fees come back. We’ve really worked in tandem with them on this process."

Sands is making it a priority to gain a foothold in New York City. MGM Resorts also has its eye on New York -- MGM has already purchased the Empire City Casino in Yonkers. Genting Resorts has similarly bought the Resorts World New York City in Queens and is waiting for a license to start operating. The mega-casino operators are promising heavy investment in the state if the ban on new casinos in New York is lifted.

Legislation

Gov. Andrew Cuomo and legislative leaders are leery of lifting the moratorium on NYC casinos. That moratorium was put in place in 2014 so that the four upstate casinos could take the needed time to build their businesses. At this point, the state legislature needs to direct regulators to allow the Yonkers and Queens casinos to upgrade from a racing venue with video-lottery terminals to full-scale casinos with sports betting and table games. Alternately, the Assembly can pass a bill that would open the bidding for new casinos. 

Michael Levoff, senior vice president for public affairs at the Genting Group stated, “We are simply having discussions about how to maximize the value in existing gaming assets in downstate." 

Locally

MGM’s push for a casino license in Yonkers is being supported by local leaders. MGM bought an existing racetrack in January for $800 million, based on their belief that the state would grant them a license in the near future. Uri Clinton, Empire City president, said, "We’re just kind of educating people on the vision we have for the property."

Sands wants an open bidding process for any new downstate casinos so that they can get in on the act. They don’t want to see licenses simply awarded to the two existing racinos — Resorts World New York City and Empire City.

Former Gov. David Paterson, who is now consulting for Sands, wrote to lawmakers "Open competition builds a pathway for local careers and vocational training programs and stable good paying jobs with quality, dependable benefits that build up working-class families. However, this is all at risk if the state takes the easy way out by stifling competition and providing giveaways to select operators."

Upstate

The four upstate casinos have been struggling and for some, such as del Lago casino at Finger Lakes in Seneca County, the debts are mounting. Del Lago sought a state bailout but that was denied. Resorts World Catskills in Monticello is using cash infusions from its wealthy owner to stay afloat.    

The upstate casinos have signaled that they are willing to work with downstate casino interests and with the state on a deal that would lift the moratorium and would grant them the breaks that they need to survive. The state would benefit through the approximately $300 million licensing fees that the big casinos are prepared to pay for a New York City property.

Jeff Gural, owner of the Tioga Downs Casino in the Southern Tier, said that the  Legislature and Cuomo should drop the ban.  "Why would you wait five years to open the downstate casinos?" he said. "Obviously, there are issues that we have, but by and large, if I were the governor, I would certainly do it."

State Response

Robert Mujica, Cuomo’s budget director, said the state doesn’t “have the resources to open up gaming downstate.”  Assembly Speaker Carl Heastie, D-Bronx, said he has reservations about letting downstate have casinos.

Mujica told reporters that the governor doesn’t believe that the state will benefit from downstate casinos.  “If you accelerate it, you would have to pay the current casinos close to $300 million. .“So you’re going to have to pay them first in order to do it.”

But the downstate casino interests said they would not leave it to the state and, rather, would cover the costs.

"We wouldn’t expect the state to fill that void," said the Sands’ Reese. "The industry should step forward and have a path for the upstate operators to recoup those portions of the license fee." 

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