Genting's Audacious Tuxedo Proposal Has Worldwide Ambitions

Man, it took me a few days (and a couple of excellent music shows) to recover from watching all of the oral presentations by the casino applicants on Monday and Tuesday.  I had a headache for around 18 hours afterwards.  You can read all of my tweets if you care to scroll through my Twitter feed here.  Or here's a serviceable recap of Tuesday's presentations from the Albany Times-Union.

It was all a lot of slick (and not that slick) videos, lofty (and, in some cases, dubious) claims and promises, (deceptive) illustrations of young, affluent looking types having fun, subtle (and not so subtle) putdowns of the competition....but one thing was notably missing.  The other side of the equation. 

Americans, according to The Economist, lost $119 billion gambling last year, most of it at casinos. [Aljazeera America]

Yeah, all that money that is gonna create jobs (for now), fund education, pay for fire truck ladders, and bribe enrich local governments has to come from somewhere.  Out of all of the presentations, only Jeff Gural/Tioga Downs acknowledged that the money lost at casinos is cash that is displaced from other segments of the local economy.  Otherwise, one might think that the money is generated out of thin air. It comes out of peoples' pockets, and while some can afford it, others cannot.  And while all of the bidders paid lip service to the issue of problem gamblers (one, the Nevele, even had a guy from the NY Council on Problem Gambling on hand, nice touch), none addressed the studies that suggest that up to half of casino revenues come from those with a gambling problem.  And I've never heard any studies whatsoever about where/how that $119 billion might be spent/saved/invested otherwise.  And how the overall employment/economic picture might be affected by that.

Look, there are some desperate towns/communities involved here.  Who are we to tell them that a casino won't provide a lifeline for some of their unemployed, inject life into local businesses, and provide much-needed financing for education, infrastructure, and government services?  But the money is, to a significant extent, as one casino operator himself recently conceded, a tax on the poor. I sincerely hope that towns like Newburgh or Ellenville get the relief that they need.  But I also hope that peoples' lives aren't irrevocably damaged in order for that to happen.  And remember, this is not a charitable endeavor, even though it sometimes seemed that way from the tone of the presentations; two of them referred to casinos as "beacons."  These companies stand to profit enormously from the pain of others, at least to some extent.  Otherwise, we wouldn't be hearing from them.

Seems to me that the board, or at least its chairman Kevin Law, bought right into all of the nonsense about water parks and all of these amenities that are clearly intended to gloss over the hard reality of the hardcore gambling facilities they are proposing to build. 

“On one hand, we want to help invest in communities that are distressed or have been historically not receiving the types of investments we would have liked for them to have received.."

But, Law said, “the state’s trying to grow the tourism industry and so there are some applications which would lend themselves to things beyond casinos and take advantage of skiing and golfing and vineyards and other aspects of our great state." [Capital New York]

Oh jeez, seriously Kevin Law?  The tourism industry?  Skiing and golfing?  Dude, you're really gonna fall for that?  Maybe he should speak to his colleague Stuart Rabinowitz, who skeptically questioned the Howe Caverns team about the whole concept of a casino being a family resort destination.  I wish he would have asked every bidder that.  (Rabinowitz was not on site on Tuesday; he observed and participated via the internet.)

“And then you have the economic realities of proximity to the masses of New York City’s population, and the real possibility of New Jersey, perhaps, allowing for casinos north of Atlantic City, which would then lend themselves to, ‘well, are we going to get boxed out?’ And do some of the later presentations make more sense?” Law said, referring to the Orange County proposals.

The Catskills bidders, and those needy towns in which they are proposing to build which are fervently hoping against an Orange location, cannot be encouraged by Law's remarks.  I'm not sure about this guy.  There were some times when he asked prescient questions, and others when he seemed confused, particularly when he asked Mohegan Sun if they were proposing to build at the Concord or at Grossinger's.  (Unless that was a sly commentary about their presentation not making that clear.....though it seemed quite so to me.) And I'm also still not quite sure whether Law and this board just missed the memo that everyone else seems to have gotten about two licenses going to Catskills/Hudson Valley and one each to the other two regions; or whether that 4th license is truly at play statewide.  It's obvious to anyone that the Southern Tier ain't getting two licenses, so I don't understand the point of his presenting that to the bidders as a possibility.  And the only possible scenario by which the Capital District gets two would be one at Howe Caverns, and one in the Albany/Schenectady area; but even that seems extremely unlikely. It's been suggested that the board will only award three licenses and punt on the 4th (thereby creating another round of lobbying and campaign contributions).  If the board is indeed going to diverge from the expectations, I'd think the latter is by far the most likely scenario.

One thing the board had exactly right is its sense of narrative.  By having Genting's Tuxedo proposal go last, it surely saved the "best" for last....if "best" means biggest, anyway.  We started out on Monday with Tradition's proposal for a $155 million project, plus a $35 million licensing fee, creating maybe 1500 jobs and generating $135 million in annual gaming revenue, with 90% of that coming from the local area.  We ended up on Tuesday evening with Genting's ginormous $1 billion Sterling Forest Resort - plus a voluntary overpayment of $380 million on top of the required $70 million licensing fee ("we can write the check tomorrow") - with a globe-spanning customer base, some 4,000 jobs (at an average wage of $75,000 a year....or so we're told; no doubt including the executives) and over $1 billion in annual gaming revenue.  Their hotel would be 1,000 rooms; we had heard of hotels with as few as 100 rooms, such as in East Greenbush.  They're going to pay for a dedicated exit off the NYS Thruway, at a cost of some $30 million.  They're going to revitalize the ski slopes and the gardens; the latter will be "mentioned in the same breath" as spectacular vistas in the Grand Canyon and Yellowstone Park, we're told.  "It will invite guests to dream of the intoxicating moments of life." 

“I don’t think it is a shock and awe strategy,” said CFO Christian Goode. [Daily News]

Well, I was pretty shocked and awed at the sheer audacity of it all.  We'd been hearing all this talk about drawing customers that are presently going to other states, and from those states themselves.  Genting is talking about drawing gamblers from China, flying them to Stewart International Airport in private jets, and unleashing them upon the baccarat tables, apparently their preferred method of gambling.  In their minds, they're not competing with Yonkers.  They're competing with Las Vegas; they displayed a slide showing that it takes two hours longer to fly there from Beijing than it does to NYC.  They don't seem to particularly care about the threat of a casino at the Meadowlands, because they plan to increase their percentage of international revenue from 20% to 45% by the time one gets built there (and they ain't talking about Canada).

[Say, hypothetically, 100% of their revenue came from Asian tourists that can afford to fly here, check out some restaurants, shopping, and museums in NYC and then go to play baccarat and shop at Woodbury Commons and ski and check out the Renaissance Fair (but no golf at Sterling Forest, much to the apparent disappointment of board member Dennis Glazer).  Would it change the ethics of all of this if all of the jobs and revenue were generated in that way?  Surely wouldn't be the first time that Asians are funding government here!  Yes, it does seem exploitative....but anymore than depending on poor schnooks gambling away their paychecks?]

So, in one way, it's hard to argue with this gentleman:

“How can you say no to that?” said Chad C. Beynon, a gambling analyst at Macquarie Securities Group. “How can you honestly pick someone else?” [NY Times]

On the other hand, as the gaming committee leaders of the state Assembly and Senate complained after the hearings:

"[Assemblyman] Gary [Pretlow] and I intended Orange County never to get a casino because any of the disadvantaged counties – southern Ulster or Sullivan County – it’s going to hurt their banking efforts," [Senator John] Bonacic said. "Banks make decisions on anticipated revenue." [Politics on the Hudson]

So, it will come down to the governor location board deciding what is the real priority here - helping the counties that Cuomo were quite specific about benefiting in the immediate aftermath of the referendum vote?  Or taking the most money, no matter where it's coming from?

That's the big question....and one of the reasons why, despite what Law said at the end about possibly announcing their decision in mid- to late-October, I don't think it will happen until after the election. I don't believe Cuomo wants his margin of victory to be mitigated by furious voters who didn't (or did) get the casino that they wanted (or didn't).  Unless of course he comes riding into Sullivan County on a white horse days before the election announcing that they'll be no casinos in Orange County.  Looking at the size, scope and revenue projections of not only Genting's Tuxedo proposal, but those by Caesars' in Woodbury and Genting's own alternate proposal in Montgomery (which they made explicitly clear upon questioning is their second option), it would appear the money may be hard to resist.  I'd originally predicted that the casinos for that region would be limited to the Catskills in order to comply with the stated intention of the law.....but it's hard to still believe that considering the money figures that are being floated here.

 - Of the three Catskills bidders, only Empire Resorts (proposing the Montreign project.....which we learned is a combination of Monticello and the "reign of a king") said that they would forge on even if a license is awarded in Orange....although on a significantly smaller scale.  Upon questioning, the Nevele affirmed that they would not proceed even if the Orange casino is the Saratoga harness proposal in Newburgh....which Saratoga contends would not harm a facility in the Catskills (an assertion which was greeted with skepticism by board member Dennis Glazer).  Two of the Catskills bidders used the governor's own words about the importance of revitalizing upstate areas in their presentations.

 - The Nevele, repeating a claim made in their application, said that a casino there "will end unemployment in Ellenville in our lifetime."

 - As there were on Monday, there were subtle tweaks of the competition without mentioning their names (or drawing the wrath the board).  Saratoga harness pointed out that they don't have a conflict of interest in NYC whereby they might encourage their patrons to go from a high-tax racino (Aqueduct) to a lower-tax casino (a Genting facility in Tuxedo or Montgomery).  (Though they might very well want to do that themselves should they win a license, which they surely will, whether in Newburgh or East Greenbush.)  The Penn National/Cordish team, hoping to build in South Blooming Grove, a few miles from the Woodbury Commons mall, completely dismissed Catskills casinos as being too far from NYC.  And, most amusingly, on one of their slides, Mohegan Sun noted the location of the Monster golf course next to their proposed casino at the Concord.  Of course, that golf course is on the Adelaar part of the property.  That didn't however escape the notice of golf-conscious board member Dennis Glazer, who elicited an admission from the Mohegan Sun team that the course is not on their property and therefore not part of their proposal.

 - I find it pretty astonishing that Zephyr Teachout won SO many counties outright - some 30 in all! I think that's been understated in the reporting on the primary.  She got as much as 78% of the vote, in Columbia County, and trounced the sitting governor in the Capital District area.  Here's the electoral map, with Ms. Teachout triumphant in the counties shaded in green.

Whether it has anything to do with the casino process I can't say....but she beat Cuomo in all but two of the counties where a casino is being proposed, one of which (Orange) was a virtual dead heat.  Ironically, since hers was supposed to be a challenge from the left flank of the party, it was in NYC that Cuomo ran strongest, perhaps reflecting a GOTV effort and the support of some unions.  I would think that some of Ms. Teachout's support was "anyone but Cuomo" votes from the right flank of the party as well, in large part (based on how many lawn signs that I saw in my travels in and around Saratoga) based on his SAFE Act....and from across the political spectrum due to the Moreland Commission scandal, and the unprofessional behavior towards his challenger that was widely viewed on video last weekend.