NYGA (Finally) Turns Against Casino Legislation

The New York Gaming Association, representing New York State's racetrack racinos, announced their opposition to Governor Cuomo's proposed legislation to, in the initial phase, site three casinos upstate.  In a statement, NYGA President James Featherstonhaugh said:

After considerable study and analysis, the members of the New York Gaming Association (NYGA, which is comprised of the state’s racetrack casinos, known as “racinos”) believe that the proposed “Upstate New York Gaming Economic Development Act of 2013” will not have the result desired by the legislation’s supporters. The new casinos authorized by the legislation (and referendum) will instead simply cannibalize as much as 85% of the state’s current gaming market, shifting revenue and jobs from one facility to another but resulting in no real increase in new jobs and an annual loss of $1 billion of tax revenue for education.

The proposed legislation would permit the creation of new, Las Vegas style casinos in close proximity to the existing racinos. These new casinos will have new, high tech slot machines (which are much more attractive to customers than Video Lottery Terminals), table games, the ability to extend credit to customers, higher wager limits without withholding winnings, a tax rate as low as 25%, and fewer safeguards than exist under current law. Racinos currently pay an effective tax rate of 67% to the state, so when their current revenue shifts to the new casinos paying just 25% in taxes, the net result will be a major loss of tax revenue used for education.

As a consequence, it is not possible for NYGA to support the current proposed legislation. We believe that the only way to prevent the loss of major tax revenue and the stagnation of jobs is by permitting the five racinos not located near current Tribal zones to operate under the same rules proposed in the new legislation. This would prevent the loss of tax revenue for our schools, result in the immediate creation of tens of thousands of new jobs, and spark billions of dollars of new investment.

Well, now....my only question is, what took them so long?  Anyone who's been reading this blog knows that I've repeatedly predicted that NYGA would eventually pivot and turn against this thing; and that hardly makes me a genius (despite the Head Chef's protestations to the contrary!).  This was virtually written in stone as far as I'm concerned going back almost exactly one year ago when the governor, when asked about the prospect of the racinos getting exclusive rights to the expanded gaming, replied "I 100% oppose that." 

  "The current racino situation in this state is a scandal, in my opinion.  You try to find the rhyme or reason on racinos, and why taxpayers get what they get, it defies logic."

The group went silent for awhile, but surfaced again, tentatively at first, with ads touting their success in generating jobs and education income.  But Cuomo has been quite clear about his casino plans, and it was just a matter of time before NYGA would oppose them.  Don't really know what they were waiting for.  Perhaps Featherstonhaugh is so used to getting his way as a prominent Albany lobbyist that he thought he could impose his will; and his recent announcement that his Saratoga racino would expand was perhaps his final last gasp attempt to do so.  (And I've never understood how this group would hold together if just one of its members managed to score a license.)  But now, with the legislation being shaped behind closed doors, and with Genting, its most successful racino operator and the one with the most resources, in a competition with other aspirants in the Catskills area for the one facility to be sited there (it holds a stake in Empire Resorts, which is proposing to relocate its Monticello track and racino to the old Concord site) and hardly guaranteed success, the group has finally conceded defeat.

Racetracks themselves are also paying close attention to the proceedings....or at least they should be.  According to the language in the bill released last week, in the case that a casino actually is awarded to a current racino, it shall:  Maintain payments made from video lottery gaming operations to the relevant horsemen and breeders organizations at the same dollar level realized in 2012, to be adjusted by the consumer price index for all urban consumers, as published annually by the United States department of labor bureau of labor statistics.

While that may provide a floor for the horsemen and breeders, it also appears to cut them out of any gains that the VLTs at the facility may provide, excludes revenue from the new gambling games that would be featured in full casino....and I don't see anything about payments to the racetracks themselves, only to horsemen and breeders.

It also states:  All racetracks locations awarded a casino gaming facility license shall maintain racing activity and race dates, as deemed appropriate by the commission.   That "as deemed appropriate by the commission" is a potential loophole big enough to fit Belmont Park itself through, and surely doesn't provide any comfort to horsemen who have fought so hard to maintain their racing dates.

New casinos that are not currently VLT operators would be required to donate five percent of its "net revenues from slot machines" as follows: 3% to the closest racetrack (thoroughbred or harness), 1.5% to the next closest racetrack and .5% equally divided between the Harness Fund and Thoroughbred Breeding Fund.  But that obviously would only benefit the nearby track; and what exactly would constitute "net revenues from slot machines" is hardly clear.

And that is all besides the obvious potential damage that competition for gambling dollars from casinos could do to the racing industry in the state.  Politics sometimes makes strange bedfellows.  The NYGA and the NYS Horse Racing and Agriculture Industry Alliance - the group formed late last year by thoroughbred AND harness horsemen along with the NY Farm Bureau - could become fast friends in this fight, and the latter should welcome any help it can get.  Anyone connected with the racing industry - and any of us who care deeply about its fate - need to see the casino referendum go down in flames this November.