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Thursday, December 18, 2014

Location Board Gets Two out of Three (Not Four) Almost Right

The Gaming Facility Location Board has spoken, and no, their decision did not favor the politically connected bidders as I'd anticipated would be the case.  If there was a backroom deal with members of the New York Gaming Association in the weeks preceding the referendum vote in November, 2013, it was obviously scrapped and left on the editing room floor.  Jeff Gural, the owner of Tioga Downs, and James Featherstonhaugh of Saratoga Raceway and Casino are both left without their coveted casino licenses. Instead of sticking to the script of intervention, influence, and interference which is well worn in Albany, particularly with the sitting governor of New York, the board did their job earnestly and independently, so it seems.  I'm happy to admit that I was wrong, though I will offer no apologies for the nature of my suspicions.

That said, I don't think that the location board got this all right.  And they surely showed zero sense of drama!  They led off with the most anticipated aspect of their decision, revealing right off the bat that there would be only three license recommendations, with none of them awarded to an Orange County bidder.  Which, as you may recall, wasn't really the idea in the first place.  Not sure what the point of that entire Orange County exercise was, other than to cause a lot of angst and a lot of wasted time, effort, and money on the part of those who mounted bids for a facility there (including money that was directed to well-connected lobbyists and to politicians' campaign funds).

It also appeared as if the board didn't succeed in keeping their decision entirely to themselves.  Trading in the stock of Empire Resorts, set now, pending final licensing by the Gaming Commission, to be the operator of the Montreign casino at the old Concord resort in Thompson, NY in Sullivan County, was frenetic in the days leading up to the decision.  The stock (NYNY, and I still don't understand how they got that symbol!), flirting around 6 1/2 on Dec 12, rallied to 8 on Tuesday on heavy volume.  (It soared to 9 after the announcement before selling, and perhaps some buyers' remorse, took hold and drove it down to 7.13 by the end of Wednesday's trading session.)   And I was surprised on Wednesday morning to see that I was now being followed on Twitter by Galesi Group, who teamed with Rush Street Gaming on the winning bid for the Rivers Casino and Resort in Schenectady.  Perhaps that didn't mean anything, and I don't mean to be presumptuous enough to think that anyone there or anywhere really cares about what I write or think; but I wouldn't think that the folks at Galesi would be curious to see what anyone had to say on Twitter if they didn't think they were going to be selected.

The third license, awarded to Wilmorite for their Lago Resort and Casino in Tyre, is where I think this board really went off the track, ethically and logistically.  We'll get to that in a moment.

The recommendation for Montreign is surely no surprise, even to those who weren't trading NYNY stock, given its location in the Catskills, an area which has been practically begging for casino gambling for decades.  It's a lavish proposal with all of those amenities which we're told will attract gamblers to travel to upstate NY from NYC and beyond; an unproven concept which has no precedent here.  Just go their homepage, roll over the letters as instructed to see all of the nonsense intended to dazzle and distract from the facility's true purpose - to get people onto the gaming floor and keep them there as long as possible.

I have some mixed feelings about their selection.  Of all of the regions that were considered, the Catskills is surely the one which warranted a casino given its history as a faded resort area, the enthusiastic support there, and the long effort to bring this to fruition.  So, even as someone who opposes the whole idea of expanding gaming in the state, it's hard to argue with this location.  And it's great news for the horsemen at Monticello, who recently concluded a deal with management which depended on Empire getting the casino.  It guarantees the existence of the racetrack for the next nine years, and grants the horsemen, in lieu of a share of casino revenues, equity in the company (which they may wish they had when the stock was at 9 yesterday).

On the other hand, Mohegan Sun's proposal for a casino on an adjacent slice of the Concord property seemed slightly less cynical and insincere than most of the others in the state; and may have provided more wide-ranging benefits in the region.  The company's CEO, Mitchell Grossinger Etess, has family roots in the area, and may really have cared about revitalizing it instead of just paying lip service to the idea in order to line his own pockets.  His proposal would have included a revival of Grossinger's (which the Etess family used to operate), as well as commercial development in the city of Monticello.  (Etess said afterwards that he is "happy for Sullivan and wish Montreign the best of luck.”)  In its explanation of its decision, the board did not specify any negatives about the Mohegan Sun proposal (as opposed to the Nevele, which it noted had not completed its financing); only that Montreign is "a more comprehensive and well-measured proposal."

Schenectady was also no surprise; indeed, the rumors that it was the leading candidate had been swirling for weeks.  It fits the bill in that it's a city that has struggled financially (though already in the process of a revitalization); and the location, along the riverfront on a long-abandoned industrial site, seems a logical one; it doesn't sit squarely in a residential area like others will or would have.  However, the sentiment was hardly unanimous in favor of the casino; there was opposition to the proposal there.  Didn't cover it much here, and, in fact, when I did, I got yelled at by someone from the group for belittling the notion that the casino would prey on students at Union College (from which I graduated a really long time ago).  Indeed, the school again expressed concerns after the decision.

Personally, while acknowledging the proximity of the campus to where the facility will be and the potential to lure students, I still think that the casino presents more profound problems than preying on students whose parents are spending $60,000 a year to send them there; I'd be more concerned about the community college myself.  The Stop the Schenectady Casino group, seeming resigned to the decision on its website, outlined some of those concerns, particularly those of problem gaming, and the need to "protect the Historic Stockade neighborhood from an increase in traffic that will almost surely reduce the quality of  life in the neighborhood, and threaten the integrity of its historic structures."  (Preserving that neighborhood was the original goal of this group before they pivoted to the casino.)

That brings us to Tyre.  Along with East Greenbush, where Saratoga harness' proposal, led in part in a most arrogant posture by Morgan Hook of the lobbying firm SKDKnickerbocker, was most rightfully denied in the face of the fierce opposition there (though the board would only acknowledge that "the level of public support....was significantly less" than the other proposals), Tyre was where I heard the most from residents terrified at the prospect of a casino destroying the nature of their residential area.  I feel terrible for the people there who will be affected.  Imagine living your life in a quiet area, minding your own business, and some millionaire dude comes along to plop a 24 hour casino right next door.  I wrote extensively about Tyre in this post, and here I'll once again post the Google Maps satellite views - one closer and one wider - of the rural area where this casino would be built.




The red sign post is where the Dawley family lives, and, should this casino indeed be built, their lives and those of their neighbors will surely never be the same.  The residents have mounted court challenges which have thus far been entirely futile.  They've targeted the environmental review process (SEQRA) which, as we detailed here, is designed to be manipulated by the "lead agency" - in this case, the town itself - to fit its agenda.  The Town Board members simply declared that the casino would have no significant environmental impact on community character, and - poof - it became so. One need only to look at the above photos to realize that that assertion is nonsensical and self-serving.  So, we hope that the community will endeavor to carry on their legal challenge.  It seems unconscionable that the location board would allow a casino to be constructed there.

And that's besides the fact that this award to the Southern Tier region is not actually in the southern tier of the state, as we discussed here.  Despite the fact that Governor Cuomo again reiterated yesterday that these casinos will act as a "magnet" to lure New York City residents to Upstate destinations, I can virtually assure you that no one - and I mean nobody - from the city is going to be traveling up to Tyre to gamble, I don't care how many scenic lakes there may be.  (And in fact, I highly doubt they would have traveled to one at Tioga Downs either....and it surely remains to be seen if they do so to the Catskills or Schenectady).  It's been estimated that as much as 80% of the business in Tyre will simply be gamblers relocated from Turning Stone or Vernon Downs or the Finger Lakes; and though that's a self-serving estimate by Turning Stone, it makes far more sense to me than the idea of a family trip from Manhattan.

As you might imagine, Tioga Downs' owner Jeff Gural is not very happy about this.
“I’m totally shocked. I really am. I didn’t think that, first of all, I didn't think that they belonged in the competition, they’re not in the Southern Tier..

“The governor came to Binghamton and announced this and promised the people of the Southern Tier a casino....Um, I was asked to help get the law passed. I spent about $800,000 of my own money to get Proposition One passed, only to get put out of business. I mean, I, I think it’s a joke to be honest with you." [Capital New York]
 Note here that the amount that Gural spent to get the referendum passed has suddenly gone up from $600,000!  And here we see the sense the entitlement that Gural, and surely also Feathers, had about this.  And he went on, and on, and on....
 “It will hurt me at Vernon. But, I don't give a shit about me, I’m wealthy."
....
"It’ll hurt me at Vernon eventually. I wouldn't be surprised if Finger Lakes closes. This is a devastating impact on the racinos in the state that have provided millions of dollars to the state and our thanks is this idiotic decision? It’s a disgrace. No fracking and no casinos? Why don’t you just tell them they should all move someplace else?”
....
“I mean I was concerned, to be honest, that they had a committee of people who knew nothing about the industry, and that’s what you get, you know? I think they’re well-intentioned, but how, they certainly screwed Turning Stone and they put Finger Lakes out of business. They probably put Vernon Down out of business. So basically, they put two casinos out of business and screwed the third one.”
.....
"And what really pisses me off is the governor asked me to spend $800,000 of my money to pass Local Law 1, Proposition One? What was that all about? I mean—why would—the whole thing is sickening to be honest with you."
 The reference to fracking is with respect to Cuomo's announcement that he will ban the practice in the state; curious that he would make that long-anticipated decision on the same day as this one!  Not sure which one he was trying to distract attention from!  (Of course, I'm sure there are some, if not many, in the Southern Tier who believe that yesterday's developments saved them from the ill effects of gambling, air pollution, and contamination of the water supply.)  In making the fracking announcement, Dr. Howard A. Zucker, the acting state health commissioner, noted that his review boiled down to a simple question: Would he want his family to live in a community where fracking was taking place? [NY Times]  That's obviously not the approach that the location board took in deciding to site a casino in the residential town of Tyre.

10 Comments:

Dan said...

How many miles will the casino be from the Finger Lakes track/casino?

SaratogaSpa said...

I ask myself this-Do the 3 locations pass the sniff test?

The Catskill Pick does, the Schenectady location does, Tyre does not.

jk said...

> great news for the horsemen at Monticello

Bad news for hose racing customers.

Anonymous said...

No matter what they say, Fingerlakes racino will be severely hurt, (it's about 25 miles away), Vernon Downs will surely close. The jobs lost at both of those will more than offset anything gained in Tyre. This area is so sparsely populated, employees will be cannibalized from many area hotels, restaurants and the racinos. Selecting this location makes no sense at all.

Anonymous said...

The 'real' southern tier is much more economically distressed than the Finger Lakes area is. They have been severely 'kicked in the teeth' by the double whammy of no casino and no fracking.

jk said...

The fracking announcement coincides with the crash of the price of oil. Drilling in the Southern Tier might not be viable at the current oil price.

Anonymous said...

How's this for justification: "First, we felt Lago had the best overall financial capabilities to succeed," Law told reporters, the Gannett News Agency reported. "And it really wasn't a choice between Lago and the other two in the Southern Tier. It was more of a choice between Lago and nothing in the region." I'd thing the folks in Tyre deserve better than that.

Anonymous said...

Looks like Mohegan Sun took another hit, first Steve Wynn now this.

Figless said...

Bad news for NY Thoroughbred Horsemen, next kick in the teeth will be the NYC Casino competing with AQU. Someone might want to consider building a new TB Track in the REAL southern tier and apply for a Racino license. Its could as heck up there but there will be a lot of dates available soon and a whole lot of NY Breds with nowhere to run three months per year.

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