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Friday, August 29, 2014

Inspector General Report on Takeout Error Confirms the Obvious

If you missed it (and are interested), this is the Inspector General's report on the takeout "scandal" in which $7.4 million was improperly withheld by NYRA from winnings paid on certain exotic bets from Sept 2010 through December of 2011.  The report is a 122-page exercise costing who-knows-how much money that confirms what we already knew: it was a mistake.  An inadvertent error on the part of a multitude of people and entities.  A "snafu," rather than a true "scandal."  No smoking gun emails amongst NYRA executives plotting and scheming to squeeze a little extra revenue out of its customers by intentionally flouting the law.  You can bet that if there were, this report wouldn't have been issued on the Monday of the sleepiest week of the summer season, a couple of days after Odato reported on its existence in the Times Union. Though former CEO Charlie Hayward takes the brunt of the blame in newspaper reports such as Odato's, the most pointed criticism leveled against him in the Findings and Recommendations section is regarding his testimony that he did not completely read an email sent to him by Steven Crist in which a fan pointed out that the rate was in violation of the law.  "Regardless of the veracity of his representation, Hayward was, at best, careless in his reading of the email."

The error really came down to two things: the failure of the legal department to note on their calendars the date on which the temporary 1% takeout increase was to sunset; and, that notwithstanding, the fact that NYRA executives believed that they could rather than had to lower the rate.  Not to mention the failure of various people and entities, both inside and outside of NYRA (such as the now-defunct Racing and Wagering Board), to notice the discrepancy.

But we knew that.  And, I suspect, so did those who ordered and conducted the investigation.  It would have been a feather in a lot of caps had they found some organized effort to "rob" bettors, but it was not to be. As we knew.

Nonetheless, the release of the report gave the press and a politician the chance to catch up on a little NYRA bashing. Report: NYRA Cost Bettors $7 Million screamed a front-page headline in the Saratogian, as if this was some kind of new revelation.  State Senator John Bonacic, a strong supporter of the casino resort destinations (that contribute to his campaigns) - and therefore, an enemy of horse racing - took the opportunity to note the troubling lack of accountability that had existed within NYRA which resulted in the overcharging of the betting public. 

“Although more than $600,000 was refunded, there is more that can be done to set the overcharge right for aggrieved fans. [Capitol Confidential]
Actually, there are no aggrieved fans.  Nearly everyone who was affected never knew what hit them, and didn't miss an amount that was probably, in many if not in most cases, less than it costs them this year in increased admission fees every time they go to Saratoga.

Nonetheless, the matter was blown out of proportion - in my opinion, anyway - to became one of the key reasons/excuses used by the governor to take over the NYRA board, leading to the uncertain place where we find ourselves today, with the scheduled end of state control approaching next year.  We can only guess as to what will happen.....mine is that I continue to doubt that it will be anything nearly as drastic as Frank Stronach owning one-third.  But the direction of NYRA surely has changed drastically as a result.  Hayward was focused on teletheaters to fill the void left by NYC OTB - in fact, it was his concern about the necessary politics that was behind his failure to request a takeout reduction that he thought was optional at that time.  But under Chris Kay, the matter has been squarely on the backburner as he and Martin Panza try to attract more people to the track on 'big days' with an enhanced guest experience.  And the former CEO, as a racing guy, appreciated the logic behind lower takeout rates - ironically, considering his dismissal over a rate which was too high - and surely would have advocated for them at an appropriate time, if one there ever would be.  With the current focus on short-term P&L, you can just forget about lower takeout rates here, at least in the immediate future.  The bottom line is the priority now, no matter what it takes to get to the theoretical break-even without slots (whatever that really means as long as slots money is still supporting purses and capital improvement).  We shall see where this all takes us a year down the line, and beyond.

 - Frank Gabriel, who recently joined NYRA as the racing secretary at Belmont and Saratoga, has abruptly left his position and will return to Dubai.  He is the second high-level employee hired under the present management to resign shortly afterwards; Eric Wing served briefly as Director of Communications.

Wednesday, August 27, 2014

Casino Odds and Ends, Aug 27

 - I wrote a bit (just a bit) about the Travers here on the TimeformUS blog.

Even as he was winning generous tax breaks from Sullivan County for the proposed casino at the Concord, Mohegan Sun CEO Mitchell Etess once again warned that an Orange County casino would spell doom for the project.

"The reality (then) is whether a Sullivan County casino is even financeable.....That's because at least 35 percent of Mohegan Sun at the Concord's potential business will come from Orange County, Etess told the Times Herald-Record's Editorial Board on Monday.

Given the dire condition of Sullivan County's economy — a poverty rate of 17 percent, compared with 12 percent in Orange — a Sullivan without a casino and its thousands of jobs would spell disaster."We're saying, if you put a casino in Orange County, you might as well turn out the lights in Sullivan County," said Etess, a Sullivan native whose family ran the fabled Grossinger's hotel in Liberty. [Times Herald-Record, limited free access] 
I'm not entirely sure how this is going to work as a threat, considering that Empire/EPR Properties, also hoping to build at the Concord, doesn't need no stinkin' financing, backed by Genting as it is.  The carrot that Etess and his partner Louis Cappelli are offering is to provide benefits throughout the area, and not just at the Concord.
Ehrlich cited a new deal with the struggling Holiday Mountain ski area in Monticello that would include a $1 million loan for a mountain coaster and zipline for Holiday and promotion of the ski slope to Mohegan Sun customers. Mohegan Sun would also develop a spa/hotel and a revitalized Big G golf course at Grossinger's, which is owned by...Cappelli. Another Cappelli property in Monticello near Albella's Italian restaurant would be transformed into office space, said Cappelli's son, Bryan, chief operating officer of the Cappelli Organization.
The tax breaks add up to "approximately $36 million in tax exemptions over 20 years," according to the Herald-Record.  There's also a provision to assess the property based on a lower value, and a smaller project, should one of the licenses go to Orange County.  (And as we've mentioned, the potential irony with this whole Orange County thing is that a casino there, being touted as so potentially valuable [and damaging to the Catskills] due to its proximity to NYC, would be that much more susceptible to competition from the Meadowlands and from the NYC area casino(s) that would inevitably follow.....and, in fact as this commenter adroitly points out, a siting in Orange could actually spur said development in Jersey.)

 - Casino Free Tyre heads to court today to press their legal action to throw out the town's resolution supporting the Wilmorite project.  I'd written more on their lawsuit here.

 - Montgomery County, which lost out on a possible casino when the project in Amsterdam, at Exit 27 of the Thruway, was disqualified, is considering throwing their support behind the proposal in Rennsalear. What does a casino located some 35 miles south have to do with Montgomery? Money.  What did you think?  The county legislature heard a presentation from John Signor, the president of Capital OTB, a partner in Hard Rock's Rensselaer casino bid.
Signor said OTB has been losing revenues during the past 10 years because of competition.  This also impacts Montgomery County, which gains approximately $51,000 in revenue from OTB.

The partnership with the casino, he said, would double the county's revenue to $100,000 a year, depending on the gaming revenues..
In addition, OTB is partnering with a developer in Rochester (David Flaum) to own the land in Rennselaer and provide the casino operator with a ground lease.  This would generate an additional $1.5 million in revenues for OTB. [Recorder, subscription only]
Signor told the legislators that a Rennselaer casino would generate $748,000 in total for the county, as opposed to $564,000 from the proposed casino at Howe Cavern.  Perhaps taking a cue from the city of Albany, the legislators decided to defer the decision in order to give other developers an opportunity to present proposals.  And to sweeten them accordingly.

Monday, August 25, 2014

Brush Fires for Orange County Casino Developers

A couple of little issues have popped up for two of the casino bidders in Orange County.  In Woodbury, where Caesars Entertainment is hoping to construct their aptly-named Caesars New York - an $880 million resort casino ("a sustainably designed, contemporary structure that compliments the region's natural surroundings") - the company is contending with a land use issue introduced by the descendants of one of the property's past owners.

The issue is a deed restriction that dates back to 1971, when former governor W. Averell Harriman sold the land to Avon Products.  It prohibits the construction of a hotel on the site, a restriction which is "kept in effect through subsequent sales."  An attorney for the family - the descendants of Governor Harriman and his father, the railroad baron E.H. Harriman -  warned that the family "is determined to enforce this restriction through the court system should a gaming license be awarded to Caesars.” [Times Herald-Record, limited free access]

However, Caesars, the clever conglomerate that they are, anticipated the problem and devised a workaround.

Caesars and its development partner sought to avoid that obstacle by securing an adjacent strip of land owned by Norfolk Southern Railroad, which had no such deed restrictions.

Caesars plans to build a casino on the main site and an attached, 300-room hotel on the neighboring parcel, if it wins a state casino license.
But the Harriman family says that doesn't work for them.  "The casino cannot be severed from the hotel. It remains part of its ‘purposes’ and thus, it is banned by the deed restriction.”  They are not buying the nonsense about the casino complimenting the region's natural surroundings....instead, they want to "preserve the compelling beauty of the Ramapo Valley."

Caesars says the suit is "frivolous," and sticks to the argument that the adjacent land is not part of the Harriman parcel.  Reminds me a bit of the situation in East Boston, where Mohegan Sun is applying for the Boston area license so that they can build a casino at Suffolk Downs.....but on the property that is located in the town of Revere, rather than in East Boston where voters rejected the casino in the kind of local referendum that is not required in New York.  It was Caesars who was originally to build an East Boston casino at the track.  They were forced to withdraw, prior to the vote, because state casino investigators had concerns with them, including a business relationship with a person alleged to have family members involved in organized crime outside the United States. Funny that we haven't heard any such concerns here; these companies don't seem, at least thus far, to be subject to that level of scrutiny in New York.

In the meantime, Caesars has gone ahead and opened an office in Woodbury, with a little opening ceremony.  They've promised to spend $20 million to alleviate traffic issues around the Thruway; it already gets backed up around there on busy days at the Woodbury Commons Outlet Mall.  But other than those concerns, I haven't read of any real opposition to the project in Woodbury; no organized opposition groups that I've seen...

...At least from within the town.  The neighboring village of Kiryas Joel, a Hasidic community located about five miles west, had already registered their displeasure with the Woodbury project.  However, the village has now turned its legal wrath upon a competing proposal: the one by Penn National and Cordish in South Blooming Grove, located about five miles to the north.  The Live! Hotel and Casino (exclamation point is theirs) is to be a "$750 million plus" world-class casino with 3,200 slot machines, 190 table games, and 80 poker tables.....with the usual amenities to "take advantage of the site's beautiful, tranquil surroundings" (which the operators will no doubt do their best to dissuade their customers from seeing in favor of those 3,200 slot machines).  The developers have entered into a letter of agreement with "internationally renowned chef" Bobby Flay.  Is it really appropriate for a member of the New York Racing Association board to be involved in a venture such an upstate casino whose only possible effect on handle at racetracks could be negative?

Anyway, Kiryas Joel has filed a lawsuit against the developers, Orange County, and individual members of the Village Board.  Like lawsuits we've seen filed thus far in East Greenbush, Tuxedo, and Tyre, the complaint involves environmental issues, and the failure of the village to complete - in fact, not even yet start - the SEQRA process.  Specifically, the village is concerned about sewerage, claiming that South Blooming Grove has made promises to the developers regarding sewer capacity that it has "no control or power over." 
  In the suit, Sterthous said South Blooming Grove supported the casino and offered the sewage capacity "in exchange for staggering amounts of financial compensation," which includes a $10 million payment by the casino developers to the village, a $2.25 million payment for the village's public safety department and $1 million in road improvements.
In the agreement, the village pledges to "pursue all reasonable efforts to make 260,000 gallons per day of sewer capacity available to the project, at customary rates." The figure of 260,000 gallons per day of sewer capacity is the amount the village believes it has in additional capacity, according to the host agreement.
"The village has no authority to provide through sale or otherwise any district wastewater treatment capacity to a casino without a written agreement with the county and a determination by the district that excess capacity exists," wrote Sterthous. [The Chronicle]
This is the first legal action I've seen that was initiated by a neighboring town rather than by residents in the host community itself. As we've said, in New York, as opposed to Massachusetts, developers are not required to complete formal agreements with their neighbors.  However, the complainants in Kiryas Joel (in addition to objections based on their religious beliefs), feel that this effects them directly; citing its "close proximity," and their belief that the project will "overburden the limited sewage treatment capacity."  I suppose that makes them an interested party.

The action spurred the usual response from the developers and the town.  The mayor called it - yes -"frivolous," and Penn National supplied the usual stinky response that skirts around the issue:  "We are extremely disappointed at the Village of Kiryas Joel's effort to try to deny jobs and important new tax revenues to South Blooming Grove." [Times Herald-Record, limited free access]

Friday, August 22, 2014

Ticklish Spot for Jimmy Feathers

A bit more here on the East Greenbush Town Board meeting on Wednesday that we discussed in the last post.  I didn't see this article in the Albany Times-Union until after I was done writing it.  Since I do mostly try to be mostly fair, I did note that I was getting my information about the one-sidedness of the comments at the meeting in favor of the anti-casino side from the No East Greenbush Casino Facebook page.  They're kinda against the casino, one might say.

But, as we know, the Times-Union is always fair, despite what Joe Bruno may think (except sometimes when Odato is writing about NYRA), so it's surely worth noting that this article describes "impassioned pleas by a standing-room-only crowd dominated by anti-casino residents."

Tempers and distrust ran high during the meeting, with several residents complaining bitterly about a lack of transparency in the casino application process. Of the two dozen or so speakers, just four people spoke in favor of the $300 million proposal.
Resident Jack Conway delivered a 400-page report that included a poll that showed 678 people signed a pro-casino petition over the summer, with 34 percent of them town residents. By comparison, 2,025 anti-casino signatures included 80 percent town residents. "We're telling you, in no uncertain terms that we don't want a casino," Conway said, to resounding applause. [Albany Times-Union]
As we mentioned, James Featherstonhaugh was there on behalf of Saratoga Raceway & Casino and, noting the anger against him, he quoted, according to the account, Ronald Reagan: "If you want to create controversy, change something."

I was curious as to the context in which Ronald Reagan said that, because I dunno, one might suppose that the 40th POTUS may have been opposed to the notion of "trickle-up" economics like casinos. So I did some Googling.  I couldn't find anything like it, so I question whether the quote really came from him.  The closest thing I could find was: “All great change in America begins at the dinner table.”  So I am not sure exactly where Feathers got it from.  Maybe Rita Cox.

In any event, Jimmy Feathers must be getting more than just a little frustrated at this point.  He probably thought that it was going to be a piece of cake to win a license for the Saratoga harness track.  Instead, he was run out of town by the howls of opposition from proud Saratogians who feared for the character of the town. So, he went looking around, and I recall him visiting the E23 site and the one in Schenectady.  But instead, he landed in another town that just does not seem to want a casino in their community.....but which, unlike in Saratoga, apparently has decision makers that he's been able to charm.  (Or persuade, cajole, arm-twist, etc.,)  And while the Town Board is obviously, and for whatever reason, not listening to the opponents, the siting board presumably will - presumably - as the opposition keeps the pressure on, as they no doubt will. (As Ronald Reagan once said: "When you can't make them see the light, make them feel the heat.")  As opposed to East Greenbush, there seems to be no organized opposition in Rensselaer, a town that voted for the casino referendum, if narrowly. The mayor is gung ho (his $10 million offer to Albany was accepted, kinda), and the necessary resolutions were passed without any fuss that I'm aware of. It seems like an obviously better fit.

So Feathers has some serious problems here - a SEQRA process that hasn't even started, and another organized and passionate opposition.   Of course, he has the Newburgh project too; like Rensselaer, a community which needs the jobs and the (perceived) benefits of a casino.  As I've been saying, I will be flabbergasted if he doesn't get one or the other.

 - This article in the Times Herald-Record (again, it's limited free access, so click on the link judiciously if you care) discusses the financial incentives being provided by Genting to the town of Tuxedo.  We've mentioned them before; amongst other perks, $50 million for Tuxedo, $10 million for neighboring Tuxedo Park.
The first $1.5 million installment of the $50 million gift is due in the coming days and is nonrefundable.
(These as opposed to the paltry offers being made by the Nevele to their far more desperate host communities.)  Christian Goode, the CFO of Genting America, told the Times-Record's editorial board that they're not just trying to buy support.  They really care.  Really.
"I think it's respectful and appropriate, given the opportunity," said Goode during an editorial board meeting Tuesday at the Times Herald-Record. "What we've committed to providing the town and to the region is based solely on the economic opportunity and our ability to deliver a unique product."
In a sign of its commitment, Genting will buy the 238 acres where the project would sit, whether it wins the casino license or not, Goode said.
Well, we shall see about that, won't we?  This is the same company that pledged "to work closely with NYRA to transform [Aqueduct] into a casino and racetrack that will be the envy of the country.” (It's not.)  And then they broke their promise to help keep the place clean, and delayed the construction of the Longshots simulcast facility.  So, if I lived in Tuxedo, I'd take their promises with a grain of salt.  ("Trust, but verify," as Ronald Reagan once said.)

Thursday, August 21, 2014

Meadowlands Plan Takes Shape

The Meadowlands Regional Chamber of Commerce outlined its plan for a casino (or casinos) at the Meadowlands, though I don't really understand what they really have to do with anything here, since they don't have any money.

"Who’s going to pay for it?" the chamber president, Jim Kirkos, said. "We’re going to ask people to step up to the table and come up with ideas." [Star Ledger]
Well, I suppose they can round up some interest.  These guys are talking about up to four different themed gambling areas, two 1,000-room hotels and a convention center. [WSJ]  One of those gambling areas would be at the track; a racino-type facility with slots.  That would presumably be operated by Jeff Gural.
"We believe the best solution would be to put a casino at the Meadowlands, and to try to work with Atlantic City to try to utilize the revenue that we would pay to help them recover," Gural said. "We’re really not trying to be a destination resort. Our goal is to try to recapture the business that’s leaving New Jersey and going to Bethlehem (Pennsylvania) or Yonkers (New York)."
There's that familiar theme again, the "capture gambling money that is going out-of-state" argument.  That's gotta be on the verge of becoming obsolete, isn't it?  What is going to be the argument then, once the region is totally overrun with casinos? That we have to recapture gambling money that's going to the Upper East Side?

Here's a guy who totally gets it:
Steven Perskie, a former state legislator who wrote New Jersey's casino gambling law in the 1970s, said in a recent interview with that opening a casino in the Meadowlands would only light a fire under New York to get their operations running, creating even more competition for Atlantic City.

"The notion that you could build a major facility in Jersey City and then have New York say, 'OK, we’re going to allow everybody to go across the river and make money in New Jersey' is insane," he said. [Star Ledger]
As I've said, I can't imagine it would be too long before Albany would respond and rescind the seven-year moratorium on casinos downstate.  And it's the four upstate casinos - the ones hoping to draw, with its lavish resort facilities, customers from the city - that will suffer the most.  Ironically, should a casino be sited in Orange County, widely presumed (and feared) to benefit from its proximity to NYC, it could very well be the one to suffer the most from a casino at Yonkers (where I'm assuming that a casino license will be ultimately sited - maybe sooner than later).

As for Yonkers, its GM Bob Galterio said in this interview on FIOS One News - FIOS News?? - that about 15% of its customers come from New Jersey.  (And notice how he's got his eye on the clock, noting that now it's only six years before a casino could open downstate.)  They would definitely stand to lose much of that business to a Meadowlands facility, but presumably they would gain some business by expanding to a full-scale casino.  Resorts World probably has less customers from NJ, and seems to have some geographical protection out in Queens, unless someone builds a casino on Long Island.  Any way you cut it though....even as the industry starts to acknowledge the potential over-saturation in the Northeast, it continues to hurdle towards exactly that. It's just crazy, man.

 - The pro-casino majority on the Town Board in East Greenbush held sway, despite a defection and a recusal, and voted 3-1 on Wednesday night to forward, to the town's Planning Board and Zoning Board, a request to make the zoning changes necessary for a casino to be built in an area now designated as residential.  Despite the fact that Saratoga Casino and Raceway (let's start calling them by their proper name, though it will always be Saratoga harness to me) and Churchill Downs sent an email urging supporters to attend the board meeting, speakers opposing the casino outnumbered supporters 21-5; that according to the Twitter account of the anti-casino Save East Greenbush group.  [The Times Union actually only counted four.] After that kind of display of overwhelming and passionate sentiment on one side, the board went ahead and supported the other side anyway.  The opponents must feel as if they're beating their heads against the wall.

Jimmy Feathers himself was there, in a nice car, no doubt to keep a watchful eye over the proceedings.  We can only guess as to what kind of pressure/inducements/encouragement/urging/sweet talking/proselytizing/pleading/indoctrinating/insisting/persisting/persuading/proposing/cajoling/exaggerating/overestimating/brown-nosing/ball-busting/arm-twisting/butt-kissing/hand-shaking/eye-winking is taking place as part of the effort of Feathers and his hired help to keep those people on the Board on board.  (Remember, lobbyists are not required to disclose their activities in communities with populations less than 50,000.)

Tuesday, August 19, 2014

Aquetoga Revisited

I went to Aqueduct on Saturday....yeah, it was a slow summer day in Queens.  I wanted to check out Longshots, where, we were told by NYRA's CEO Chris Kay at the recent board meeting, business has been pretty brisk since racing moved on to Belmont and Saratoga.  I was a little taken aback when I crossed the great divide between Resorts World and World Class Racing from Saratoga via HDTV.  I'd been focused on Longshots, and kinda forgot that the first floor of the old clubhouse is open for business for simulcasting.  Seemed like any other day at the races.

Ah yes, The Big A, in all its glory.  They're really gonna close this place? It was pretty packed down there.  True, the 3rd floor and the 2nd other than Longshots were closed.  But it was sure lively, to say the least!

I remember how much of a novelty the whole concept of simulcasting was when "Aquetoga" first opened in 1984; thousands of fans jammed into the plant to watch races on TV....and for just one track; seems almost inconceivable today!  Got a lot of press....and many people found it to be a rather amusing spectacle.

It was also, believe it or not, a pretty pleasant place to spend a summer day.  There was the big grassy backyard area, left over from the failed one-year experiment in 1976 when racing shifted back to Aqueduct from Belmont in July; the thinking being that Aqueduct was more accessible than Belmont, and that people would come for the new ambiance and for concerts.  "The new landscaping is designed to soften the Big A's image of asphalt and concrete," the Times reported in its 'At the Race Tracks' column on 6/30/1976 (not credited, but I believe the writer was Steve Cady).  (Interestingly, the column also noted that Sunday racing, which had been introduced at Saratoga the year before, would not be conducted there in 1976.  And that Roosevelt Raceway would "trot out some high-wheel sulkies from the Civil War period for an exhibition race" to celebrate the bicentennial.)  So we would bring chairs and blankets to hang in the backyard just like at any old track.  I remember pretty vividly being there the day that the stewards DQ'd the wrong horse in 1986.

That backyard is now of course part of the parking lot for Resorts World.  Which is actually preferable to the sad state of disrepair into which it had fallen for many years.

Despite its supposed short-term future, there were some new renovations at the Big A.  The Champs bar on the first floor is finally getting its long overdue makeover.  I don't know if it had gotten any prior attention much after the time that the picture of the 1940 Stanley Cup Champion Rangers that hung there was taken.

Also, they've removed the walls that formed an enclosed viewing area just outside of Champs, opening up the whole space.  The ugly desks that were there have been replaced by rows of comfortable looking seats. Hallelujah!

Anyway....oh yeah, back to Longshots.  That's why I was there.  And because I wasn't thinking in terms of the track being otherwise open, I'd been wondering what the admission policy would be, whether they would still charge $5 for non-NYRA Rewards members to get in.  So imagine my surprise when I discovered that, in fact, for the Saratoga meet only (presumably, though nobody could actually confirm that), the admission has been increased to $5 for NYRA Rewards members, and $10 for non-members.

Nobody really seemed to mind though.  It seemed about as crowded as I'd seen on live racing weekend days (other than the Wood); all of the seats with individual TV's were taken, the players club was full, and the crowd in the bar area got bigger as the day went on.

Those of us who have been going for all those years can clearly see the footprint of the old Kelso and Man O'War rooms.  It wasn't what I would call an elaborate renovation, but it's a really nice room.  And besides, if there was any skimping involved, I blame Genting 100%.

NYRA is of course squarely focused on achieving profitability separate of slots.  So, whether it's increased admission to Saratoga or to Longshots, not letting people in for free if they were wearing pink on Fabulous Fillies day, or slashing departmental budgets, they are exploring all options.  The quest seems to have taken on a life on its own, and become more of a mantra than a mandate; we haven't heard much at all from the governor or his attack dog Robert Megna on the subject of late.  Of course, it would be just a tad hypocritical for Cuomo and his minions to criticize NYRA for being partially subsidized by slots revenue while he is expanding casinos so that the state can sordidly balance its budget on the backs of people losing their money at slot machines.  (Not that I would put it past them, of course.)  (And it seems to me that even if NYRA was able to show a profit on its income statement from racing operations alone, as long as its purses and capital expenditures are boosted by VLT money, it still would be dependent on slots.)

 - Tom Noonan writes about the "big day" strategy, noting that the crowds on those event days have not been as big as hoped.  (Overall handle has been sharply higher though.)  As I've said, I love the way that Martin Panza has taken charge and decisively implemented his strategy.  But what I've always been concerned/skeptical about regarding the idea of occasionally luring a big live audience with a loaded race card, is this: even if you get the people there, how do you get them to bet?  That's what Jeff Gural was talking about recently with regard to the Meadowlands:
"Even as we continue to work to get younger people in there I don't think they are going to bet," he said. "It's not their thing. To give you an idea, we probably sold one program for every three people that were there on Hambletonian Day. What does that tell you? Two-thirds of the people there didn't need a program, so they were either betting on names or not betting at all." [Harness Racing Update, via Pullthepocket]
Gural says that his track did indeed attract some new younger people there - that's a start.  But how do you get them to bet?  Back when Gulfstream was Gulfstream and they had concerts in the backyard (just about where there's a Crate and Barrel now), they would hand out $2 vouchers to everyone who walked in, gather the concert goers around the stage, and literally attempt to force feed them with speakers and instructional videos on how to bet on the races.  I don't know how successful that was....and now, with everyone tied into their smartphones, one would probably need to resort to drastic measures in order to eggiweg them on to pay attention.

I dunno, maybe some of those spots in the Meadowlands are a little too nice and distracting, and need a little dose of the hardcore like at Longshots?  Getting the balance right is part of the challenge and the opportunity that NYRA has as they hopefully devise a plan to fill the void left by NYC OTB with teletheaters; at the last board meeting, Michael Dubb promised to report on the matter later in the year. To me, seeing all those people at Aqueduct - some even willing to pay good money for a comfortable seat with a TV - is an indication that such facilities, done the right way, would be quite successful in Manhattan and other boroughs.  (Though obviously they'd be shooting for a younger crowd than that which populates Aqueduct in August.)  And I believe those facilities could actually be more conducive to getting new people to bet than at a track on a crowded day.  Instead of being out in some backyard not paying attention, they would be literally surrounded by racing on big screens; constant action going on.  There, just maybe, possibly, you could better engage people with contests, giveaways, and lottery-style wagering. Just to get them involved in having an interest in the outcome of a race, in any way possible. And it could perfectly complement the 'big day' strategy; give on-track attendees coupons and offers for their nearest NYRA teletheater (we don't want to call them OTB's anymore).  (And does anyone really see a bright future for this sport if they don't migrate towards racing at night?)

 - OK, I'm hardly a prude when it comes to alcohol, and surely not one to lecture on its morality.  But I found it, let's say, a little odd on Saturday, watching the goings-on in the winners circle following the Knob Creek Lake Placid stakes.  I dunno....maybe I'm totally off base here and just being silly.  However, amidst all the furor over drugs in the sport and cleaning up the game, there was trainer Bill Mott posing for a photo with a bottle of bourbon in his hand, as others were being passed around.  Now, I know.  Doping a horse and having a nightcap are two totally different things.  But we're talking about what would be a drastic change of culture in the sport.  And cultural changes have to start at the grass roots and permeate throughout the entire community.  So, the sight of Bill Mott smiling with a bottle of Knob Creek in his hand seemed, just a tad........well, in this Today in Racing post, I called it 'somehow inappropriate.'  I'm going to walk that back, to 'somewhat incongruous.'  Either way, it just seemed a bit off.  Even Mott looked a little uncomfortable, and quickly handed it off after the photo. (I would have been glad to take it off his hands.)

 - Once again, I've been writing about the racing at Saratoga in my Today in Racing column on the TimeformUS blog.

Friday, August 15, 2014

Bidding War for Albany's Casino Blessing

 - Another reminder please that I am writing regularly, and in detail, about racing at Saratoga in my Today in Racing column over at the TimeformUS blog.  Please click here.

Rensselaer mayor Dan Dwyer really wants to see the Hard Rock Hotel & Casino win the license for the Capital District region.  In order to win the support of the city of Albany, he is offering to divert to it $1 million a year of its expected annual revenue of $5.7 million for the next ten years; some 17.5% of the city's expected casino income.  (The Albany Times-Union initially mis-reported the proposed payment to be from the developers; Hard Rock says it is not involved.)  "It's not a payoff," says Dwyer.  Well, I'm not sure quite how else to characterize it.  Dwyer says he's just trying to be a helpful neighbor. 

"Albany is a little tight on cash, so we figure a million dollars would help them in the economic condition they're in. But there's more to it than just a million dollars.  There's job creation, and we're gonna help their hotels over there, because overflow - when the people call into the Hard Rock for a hotel room, it's gonna be upscale and some people aren't gonna be able to afford that price, so what we're gonna do is recommend hotels in Albany." [WAMC]
Yeah, I'm so sure they will.

Turns out that Dwyer's offer is in response to one by Saratoga harness/Churchill Downs, the developers of Capital View, the casino that they hope to build in East Greenbush.  This offer - some $7 million over ten years - is not by East Greenbush, but by the developers. 
"We heard of Feathers' offer of $7 million, so we bettered the offer. We have to help our neighbor," Dwyer said, referring to James Featherstonhaugh of Saratoga Harness, which is a partner in the $300 million East Greenbush casino proposal.

A spokesman for the Capital View Casino and Resort declined to comment. [Times Union]
(What, no comment from Saratoga harness' what-me-worry Rita Cox, who, just the other day, said that, unlike just about everyone else in the Northeast, she's not concerned about the flagging gaming business in the region?)

Albany itself was cut out from any direct casino revenue when Hard Rock and David Flaum moved the site of their proposal from the Exit 23 site in the city, where they determined there wasn't enough room to build, to Rensselaer, just across from the Amtrak station.  Unlike in Massachusetts, where developers are required to negotiate 'surrounding community' agreements, New York cities such as Albany are not entitled to anything.  Nor does Albany officially have any say in who gets the license.  However, Capital View and Rennselaer obviously feel that an endorsement from Albany will hold sway with the siting committee.  Albany, and its mayor Kathy Sheehan, do not at all mind the attention, and are obviously playing the two sides against each other in order to get the best deal.  
Sheehan confirmed that the city's consultants [paid for by the two competing developers - ed.] have been in talks with the Hard Rock team as well as those behind the proposed Capital View Casino & Resort in East Greenbush, but not the team pushing the more distant Rivers Casino at Mohawk Harbor in Schenectady.

The mayor declined to comment on terms of any offers but said the city's analysis covers three broad categories: the availability of high-quality jobs, mitigation for impacts on the city's infrastructure and services, and how the projects will promote Albany's economic development.

"The city of Albany is a reservoir of employees," Sheehan said. "We have something that the casinos need." [Times Union]
As well as a seal of approval worth, so far anyway, anywhere from $7 to $10 million.  And now, Dwyer is turning up the heat by setting a deadline of Monday for the state capital to accept their $1 million a year offer.  Stay tuned.

 - According to Hard Rock's Executive Summary, their casino resort will include a 100 room hotel, a pool overlooking a new Hudson River boardwalk, a Rock Spa, a Body Rock fitness center, a 250-seat entertainment venue, an "upscale" steakhouse, a "marketplace" casual dining venue, and a Rock Shop retail outlet.  And an OTB, courtesy of Capital OTB. 

 - An East Greenbush councilwoman has recused herself from all Town Board votes concerning the casino after it was revealed that her brother has a possible financial interest in property transactions related to the development. 
The potential conflict of interest was listed by Capital View Casino and Resort in its application for a state license. [Times Union]
If that's the case, I'm not sure exactly why it had to take a letter from the anti-casino Save East Greenbush group to get Councilwoman Sue Mangold to step aside.  In any event, with the previous defection of Councilwoman Mary Ann Matters, who turned against the casino when she learned of reductions in the planned investment, that leaves a 3-1 count on the Town Board in favor of the project.  This comes ahead of a crucial vote regarding necessary zoning changes scheduled for Wednesday.  A 2-2 vote would be considered a rejection, and would effectively kill the project.  If there is any communication going on between the developers and the Town Board members, we won't know, due to the loophole in the law which exempts the developers from having to disclose their lobbying activities in communities with populations less than 50,000.

Thursday, August 14, 2014

Casino Operators Turn on Themselves

I think that when casinos operators themselves start to question the viability and the morality of their own enterprises, one really should take note.  Speaking at the Albany Law School conference on Wednesday, Jeff Gural, the owner of Tioga Downs Casino & Racing noted:

“I’m very concerned,....I think it’s (casino gambling) peaked. The number of people going to casinos has peaked. This year has been a turning point. Everywhere you go casinos are down, all over. It’s scary. If I was investing in casino stocks I’d really think twice.” [Saratogian]
That last sentence is kinda funny to hear from Gural considering his ambition to spend $100 million to expand his racino into a casino along with a 136-room hotel with five restaurants including PJ Clarkes and an outdoor pool with a waterslide and two lounges and a golf course.  That kinda sorta sounds like an investment in casino stocks, don't it?  Gural also described his typical racino customer as a factory worker who is "overweight, have an oxygen tank next to them."  He later accused Odato of taking his "colorful and descriptive language" out of context, saying that his point was that the "majority of my existing customers" have union pensions, have paid off their mortgages, and don't have "some of the problems that younger people have today."  And indeed, the Tioga site seems to have adjusted their photos to this reality; a little, anyway.  Whereas we usually see the young affluent types whooping it up, here we see Jane and Nancy smiling as they watch their parents gamble their retirement money away, obviously not contemplating the nursing home bills as of yet.


 I don't see any oxygen tanks though.

Magna CEO Frank Stronach, gracing our Empire State with a rare appearance here, was even more blunt about casino customers. 
  “To me a casino and lotteries are taxation of the poor.”
OK, that's what we've been talking about!  Of course, Frank operates a casino of his own at Gulfstream where he taxes the poor in order to subsidize the purses of his horse racing operation there.  I haven't heard any talk of him getting out of the casino business, even though he's apparently not getting rich with it (he's already rich, and says his return on Gulfstream is 1%).  But he does have ideas about how to make horse racing successful on its own.  Like making it a cool place for young people and to serve good food.  (No doubt supplied by Adena Meats.)

Frank also spoke about his plans to make Gulfstream the racetrack prototype for integrity in the sport by carding Lasix-free races, creating an on-track pharmacy (a notion meticulously discussed in this article by the Form's always meticulous Matt Hegarty), and increasing security.  Frank's fantasy world is a place where "there's no cheating," which would make it probably the only place on earth where that is the case. I dunno, maybe Frank can pull that off, and we surely wish him success.  However, there's a tradeoff to the kind of scrutiny necessary to achieve that. 

No, I rather doubt that.  I'm not sure people would be willing to have their dignity regularly violated in that way.

Stronach also commented on NYRA. 
He revealed that he would be eager to share ownership and operation of the New York Racing Association should an opportunity open. He said he thinks it would make sense for his organization to own a third of NYRA, the New York horse owners to own a third and for the state to own a third. [Capitol Confidential]
  Yeah, that'll happen.

Wednesday, August 13, 2014

Odds and Ends

“The northeast of the United States is approaching a saturation point of gaming......As [new] states have come online, it has broken the monopolistic nature of Atlantic City on the east coast.”
“The closures ... have just highlighted the fact that gaming properties are not cash cows.....They are not necessarily printing money at casinos." [Daily Freeman]
Sounds like another pundit talking out against relying on casinos, right? Actually, it's Michael Treanor, CEO of the Nevele Casino, Resort, and Spa (or at least he was CEO until Tuesday), justifying his company's request for property tax concessions.  According to the article linked-to above, Treanor considers it 'an appropriate exchange for the amount of community benefits a casino will bring at a time when the gaming industry is experiencing a downturn.'

Leave it to a casino developer to try and turn the skittishness over the state of the gambling industry in the Northeast to its advantage.  It was just over a year ago that Treanor was saying almost exactly the opposite!
“Our ability to do business is based upon a scarcity of casinos...If the state allowed a dozen casinos to break ground, Ellenville would be toast. “We would never be able to build something luxurious enough to draw people,” he said. With only four casinos spread out over the entire state, though, whoever got a license could thrive. [NY Times]
How quickly things change.  Of course, at the time, Treanor was assuming, as were we all, that the other casinos would be spread out to the north and west; not potentially to the south towards New York City, in Orange County. 

Sullivan County officials, desperate to see one of the two Concord bidders - the only ones left standing in their county - win a license despite the push by developers in Orange, have hired a PR firm to help make its case at the crucial September 23 hearing scheduled in Poughkeepsie
"I heard from two different, very credible sources that by far the most important part in getting a casino is the applicant's presentation," said Walter Garigliano, attorney for the [County Industrial Development Agency].

The county will contract with [Troy-based] Gramercy [Communications] for $5,000 a month for up to 3 months, also paying the firm an additional $15,000 to create a video for the presentation in September. [Times Herald Record, limited free access]
If one assumes that one of the Orange proposals is going to be successful,  then perhaps Ulster County - home of the Nevele - needs to hire a PR firm as well, or risk getting shut out.

 - The Traditions Resort and Casino (note how, as opposed to the Nevele, 'Resort' gets top billing here) is also applying for tax breaks; sales and mortgage recording taxes, as well as, like with the Nevele, a payment-in-lieu-of property taxes.  They are proposing to build in Union, NY, in the Southern Tier (competing with Tioga Downs and Lago Resort and Casino in Tyre).

The three competitors for the Southern Tier license have already spent significant sums of money.
Although selections are still at least two months away, Traditions has already spent almost $2.8 million in casino pre-development costs, according to its IDA application. While the IDA has a non-refundable application fee of $1,000, Traditions and its fellow casino applicants had to pay the state a $1 million application fee in April.

Steven Greenberg, spokesman for Lago Resort & Casino, said Lago has already spent almost $5 million in pre-development costs. The Lago project has not yet applied for any tax breaks, Greenberg said, and will examine all options at the appropriate time.

Through the end of July, Tioga Downs has spent approximately $3.5 million on architectural and engineering fees and $5.9 million on the construction of the parking garage, said Jeff Gural, owner of Tioga Downs. [Press & Sun-Bulletin]
Unfortunately for Traditions and Lago, their expenditures will likely go to waste, as Gural seems a lock for this license, as we've said before.

 - Senator John Bonacic, the chair of the Senate Committee on Racing/Wagering, spoke on a panel - which was ostensibly focused on legislative updates on racing - at the annual Albany Law School conference yesterday; when the subject apparently turned to casinos.  Bonacic made a point of glowingly referring to them as "resort destinations."  I don't know exactly what followed because Hegarty got fed up and declared a one week boycott on quoting politicians.  (What fun is that?)

In the normal world, when someone is at some kind of presentation and speaking favorably of an entity from which he/she receives a lot of money, one would expect that fact to be disclosed to the audience; if not by the speaker, then from the moderator, or from the organizers of the conference.  Like for example, researchers talking about the effectiveness of a particular drug.....   OK, bad example.  But you get the idea.  Not of course in the world of politics, especially in New York.  Bonacic collected over $50,000 from "Gambling & Casinos" for the 2012 election cycle; and as noted in the recent report by NYPIRG citing contributions for the period 2012-13, over $28,000 (not sure if there's any overlap there, but still).  I'd say that's rather relevant to his remarks, don't you?  In the normal world, anyway.

Tuesday, August 12, 2014

Bad Publicity is Bad Publicity for Casinos

I've seen some really bad press for casinos and their supporters over the last week or so.  There were three articles that I read that ranged from damning to depressing to describing something downright demonic.  They are rather comprehensive, so I'm not going to attempt to recap all of the points here.  They're all recommended reading.

The titles of David Frum's article in The Atlantic, A Good Way to Wreck a Local Economy: Build Casinos, and the NY Times front-page article, Albany Doubling Down as Casino Boom Fades, pretty much speak for themselves.  They serve as excellent summaries of mostly familiar arguments regarding over-saturation, problem gambling, benefits exaggerated by the developers, and the potential negative effects to host communities that the casinos gloss over.  From the Atlantic:

The impact of casinos on neighboring property values is “unambiguously negative,” according to the economists at the National Association of Realtors. Casinos don’t encourage non-gaming businesses to open nearby, because the people who most often visit casinos do not wander out to visit other shops and businesses. A casino is not like a movie theater or a sports stadium, offering a time-limited amusement. It is designed to be an all-absorbing environment that does not release its customers until they have exhausted their money.
And from the Times:
And while the new casinos are “intended to attract non-New York residents and bring downstate New Yorkers to upstate,” according to the state’s request for applications, a recent report from the state comptroller’s office warns that many players will be from nearby communities — posing the risk of an economic wash, rather than a net gain.
Casino jobs are also unlikely to lift many New Yorkers into the middle class. Federal labor statistics show that many gambling-related jobs — cashiers, cage workers, card dealers — average less than $30,000 per year. Casino industry data suggests wages are closer to $40,000. Some jobs also earn tips.
But the creepiest of the three pieces I saw is definitely the one in Vox, whose title also speaks for itself: Slot-machine science; How casinos get you to spend more money.  The source material for the piece is a 2012 book by Natasha Dow Schull, a cultural anthropologist who "spent 15 years in Las Vegas tracking the evolution of slot machines, exploring how and why they've become so addictive," entitled Addiction by Design, Machine Gambling in Las Vegas.  The book is extremely well-reviewed and sounds fascinating.  I should probably read it, so if anyone wants to buy me an early Xmas present...

Again, it's a long article that is well worth the read.  Here's a highlight or two:
The gambling industry has realized that the biggest profits come from getting people to sit at slot machines and play for hours and hours on end. (Schüll says the industry refers to this as the "Costco model" of gambling.) As such, slot machines are designed to maximize "time on device."
Modern machines now have ergonomic seats that don't cut off circulation and allow you sit for hours. Buttons and bill acceptors are placed so that they can be reached with minimal arm movement (and minimal disruption to play).....Advances in payment systems have also been crucial — players no longer have to feed coins into the machine. Bill acceptors or player cards with magnetic strips allow people to play for longer and not think about the money they're spending.
Schüll isn't convinced by industry arguments that responsibility for problem gambling belongs solely on individuals. "The whole modus operandi of the industry is to approach the human being as something that's manipulable. So I find it disingenuous that they then turn around and argue that 100 percent of the responsibility for any harm is on the person."
Here again is the link.  These companies have developed a whole new perverse science of mercilessly squeezing money out of their vulnerable gambling customers.  There's more in the article - ways to make gamblers feel like they won even as they lost.  Curved hallways without 90 degree turns so as to eliminate choice and preclude engaging the parts of their brains that make decisions.  It's chilling and perverse.  And, as somebody who celebrated the coming of Resorts World because it would generate big purses that enhance the racing and make New York competitive with the surrounding slots states, it makes me feel even worse than I already do.  It was easy for all of us to say, yeah, we need VLT's, and then you walk through the place and realize that the money isn't being manufactured out of nowhere.  Makes me think 'what have we done?'  And now, the industry in New York and the other slots states is just as addicted as the people sitting in their ergonomic chairs at the machines.  So, to me the idea of NYRA being able to stand on its own as a profitable entity is - the threat of VLT funds going away for whatever reason, be it due to politics or over-saturation, aside - important as an ethical mandate more than anything else.

 - Empire and EPR Properties, the developers of the proposed Adelaar resort at the old Concord site, are under fire for backtracking on their previously-stated intention to proceed with some form of the project whether they got a casino license or not.  They affirmed that notion fairly recently.
In March, the president of EPR told some 250 people at the public debut of Adelaar that it would still build a resort, even if the state didn't select it as one of the maximum two Hudson Valley/Catskills casinos.  (Adelaar) will still proceed "in some manner, but it won't be as compelling," said David Brain, noting his company had already invested hundreds of millions of dollars in the project. [Times Herald-Record, limited free access]
I find this to be a pretty interesting situation.  It's easy of course to point the finger at Empire/EPR, and say they pulled a bait and switch in order to garner the necessary local support resolutions that they need.  As the Herald-Record pointed out in an editorial: "These were the plans and the promise long before the state started on this latest plan to license casinos." The precedent is certainly there - they told the Monticello horsemen that they would relocate the harness track at the Concord, but now a track is nowhere in sight.

However, Empire's statement came after, and apparently in reaction to, some comments that were made last Wednesday by Mitchell Etess, the CEO of Mohegan Sun, hoping to get a license for a casino on the portion of the Concord property owned by Louis Cappelli.  He suggested that the two projects could compliment one another if they got a license and Adelaar did not.
At Wednesday night's presentation of his project, Mitchell Etess said that Mohegan Sun guests could use Adelaar's Monster golf course and proposed water park — both of which were featured prominently on a poster of the projects.

"They're going to build anyway," said Etess.
Well, once Etess said that, he essentially made the amenities at Adelaar part of his proposal; indeed, as one of his selling points.  I think that Empire/EPR really had no choice then but to clarify that they won't build without a license, even if they really were still planning to. "To be clear, development of Adelaar's Water Park and redesign of the Monster Golf Course is contingent upon Empire Resorts obtaining a Class III license." They just about had to say that; and they can conveniently blame the state for including Orange County.  I wonder if Etess was being clever; whether he knowingly backed his rival into that corner.

 - Tuxedo is floating a trial balloon of Genting's proposed casino.  Literally.
The Town of Tuxedo will conduct a balloon test Aug. 14 and 15 to approximate the height of the proposed Sterling Forest Resort and to determine from which areas the casino would be visible.  The project, proposed by Genting Americas, would be built on a 240-acre lot and would include 75 structures. The largest building would be a seven-story hotel, which would rise to a height of 122 feet with additional 104 feet of spires and ornamentation. [Times Herald Record, limited free access]

Monday, August 11, 2014


NYRA got smacked down hard by the Gaming Commission for the incident at last week's board meeting, when several members of the press who had not RSVP'd were barred from entering.  Until NYRA's Director of Comm/Media Relations John Durso Jr. changed his mind and let them in. I'm thinking it probably wasn't a great idea to mess with James Odato.  He took his victory lap in the Capitol Confidential blog on Monday, embedding the letter from Franchise Oversight Board Chairperson Rob Williams to Chris Kay. 

Article 7 of the Public Officers Law—Open Meetings Law—does not grant any governmental organization the right to bar admittance to members of the public simply for failing to provide prior notice of their intent to attend.
Open Meetings Law is liberally construed to ensure the public has appropriate access to its government. NYRA is not exempt from these requirements, and in fact resolved on December 12, 2012 to “conduct business subject to compliance with the NYS Open Meetings Law and NYS Freedom of Information Law.”
Perhaps Durso isn't familiar with this particular law.  He should however be familiar with a similar one in New Jersey.  As the Senior Director and Chief Spokesperson for NJ Transit last year, Durso was involved with a request under the New Jersey Open Public Records Act for information on the agency's planning for Sandy.  NJ Transit has come under fire for leaving over a quarter of its fleet in low-lying areas near the coast.  You can imagine what happened to the trains.  WNYC published a detailed exposé of the matter last year.  In response to the demand by the press, NJ Transit released a four page document entitled NJ TRANSIT Rail Operations Hurricane Plans.  Everything but the title was redacted for what the agency claimed was "security reasons."  (I kid you not.  They really did that.)   So, leave it to John Durso to explain.
“Recent events including the uncovering of an Al Qaeda-led terrorist plot targeting rail service reinforces why NJ TRANSIT will not disclose sensitive information that could potentially undermine the security of our transit infrastructure, our customers or our employees."
 Well, at least he didn't accuse Odato of being associated with ISIS.  Perhaps that's some progress.

 - I'm sorry to persist with the attendance thing, I really am.  But, if you're going to pad attendance figures, it at least has to pass the laugh test.  The announced crowd of 20,639 on the Monday after arguably the least attractive weekend of the meet does not pass the laugh test.  The attendance was 15,000+ on each of the last two comparable Mondays, both on good weather days as well.  If they're adding in 6,370, I'd say it was about the same this year.  We're not stupid.  We've been going to Saratoga for years/decades; many of us can correctly state the attendance within a thousand on most days.  I wasn't even there on Monday, and I can tell you with certainty that there weren't nearly 20,639 in the track.  That number is likely inflated by some 30%.  Not only does that not pass the laugh test, it inspires Tweets like this:
And that's why I'm saying that it just does not benefit NYRA to persist in this charade.  They'll take a bigger PR hit than they would if attendance was down this year.  We would all understand why crowds might be down a percentage point or two (not at all to say that it is).  We can't understand this kind of ludicrous manipulation of the numbers.

Saturday, August 09, 2014

Give That Man A Raise!

I've been wrong about a lot of things here on this blog.  But never more so than in this post.  There, I pondered the potential fallout of the widely reported problems on Belmont Stakes day on a CEO who was not hired for his familiarity with the racing industry, of which he had none.  Indeed, his area of expertise was hospitality.  The customer experience.  Precisely the areas in which many people felt that NYRA had failed miserably on their biggest day of the year.  I also felt he showed indecisiveness regarding the idea of cutting off general admission sales at a certain number.  "People lose their jobs over things like this, man," I wrote.

Well, Chris Kay is hardly in any danger of losing his job.  Quite the opposite.  As announced at Wednesday's NYRA Board Meeting, he got a $250,000 bonus and a 3% raise.  As reported/tweeted by the Form's  David Grening:

Not surprisingly, the Albany Times-Union's James Odato - initially barred from entering the board meeting, more on that later - voiced skepticism that I imagine that others, like those in the NY Fan Advisory Council, may be feeling as well.
The rewards were bestowed on Kay despite mixed reviews for NYRA's management of this year's Belmont Stakes, an event that drew a critical report from a state fan panel, and its sometimes shaky handling of the Open Meetings Law. [Albany Times-Union]
Kay did address the Belmont in his letter to the Board for the meeting book.
To the extent people contacted us during the day, we apologized and corrected the problem, often providing our guests with better accommodations. To the extent they contacted us after the event, we apologized and offered them tickets to other big events at Belmont and Saratoga. As for our governmental partners and vendors, we have immediately taken measures to address those issues. We are already planning for an improved 2015 Belmont Stakes Day.
(Here he echoes some comments by Martin Panza a few weeks ago in targeting the vendors and "governmental partners" - a reference to the traffic patterns utilized after the races by the local police - for their share of the blame.)  And, to his credit, Kay noted during the meeting: "We're working in the right direction, but we're human."

Belmont day aside, it's hard to say how much the guest experience has been enhanced, if at all. But there have surely been capital improvements at the three tracks.  They are detailed in Kay's letter, and include new TVs, Trakus, improving the sound at Saratoga (so that the bell can better shatter one's nerves), new video boards at the Belmont paddock, improving the WiFi at Saratoga (uh huh), and the opening of the Longshots bar at Aqueduct (where, Kay informs us, attendance and betting has been
"particularly strong" since the end of the Big A meet; over 30,000 visitors since it opened in April). Those are all good improvements.  But we have a right to expect such (overdue) enhancements considering that 4% of VLT revenues are earmarked for them.  So NYRA gets credit where it's due, but no extra brownie points here.

NYRA was indeed profitable - without Resorts World revenue - in the 2nd quarter of the year; to the tune of $5.049 million.  That is as opposed to a loss of $10.2 million in Q1, and a loss of $1.7 million in Q2 last year. Anyway you cut it, that is a significant accomplishment considering the prodigious operating losses that NYRA has posted over the years; not to mention the closure of NYC OTB which seemed so ominous at the time. However, it's important to put it in perspective and consider the role that California Chrome's Triple Crown bid had on the bottom line.  Fortunately, Steve Zorn did the hard work, so I don't have to calculate the effect of all that increased handle.  Steve figures that this year's Belmont handle contributed an additional $4.4 million to the bottom line as opposed to last year's race.

That's just from betting of course.  Then there are the "Other revenue" and "On-track racing related revenue" lines.  I figure that all the admission and parking fees and ticket sales accrued from the 102,199 "estimated" to be in attendance on Belmont day have to be in there somewhere.  Those figures combined come in at $10.8 million, as opposed to $1.6 million in Q1, and $7.3 million in Q2 2013.  (And remember that grandstand admission was increased to $5 along with some parking fee hikes.)

So, has NYRA truly been restored to profitability?  Or is this a one-shot deal?  NYRA's press release says, a bit vaguely, that they are "on-track to achieve its first operating surplus since 2000 - a period of 14 years." NYRA is still in the hole by $5.2 million through June 30 however (again, separate from VLT's).  Q3 of course includes Saratoga, certainly a good time of the year, and admission and parking rates are up there too (even if they did sell too many of those too cheap season passes).  But I suppose it remains to be seen if they can truly be profitable for the year.  I hope so. It's obvious from my recent writings on casinos that I think it's crucial that this industry be able to stand on its own in this state.  (And actually, I've been saying that at least as far back as this post from 2008.)  If NYRA can achieve that this year - even before implementing an OTB strategy in NYC -it would be quite an accomplishment, and Kay can get another bonus.

As far as Kay having created a strong management team, I think that definitely remains to be seen.  As I've said, I like the way that Martin Panza has moved in aggressively to implement his vision, though I don't necessarily agree with his idea of what constitutes "quality" or a "big day." Other hires lack a racing background, including the Chief Experience Officer Lynn LaRocca, Chief Counsel Joseph Lambert, and the Communications Director John Durso, Jr., who we've discussed recently (and who we will again in a moment).  It's simply too soon to evaluate their effectiveness.

And regarding 'transparency?' Well, that seems like a notion that is, at best, ill-timed coming just a few days after the revelation, as exposed by Paul Post in the Saratogian, that NYRA is padding attendance figures by adding in all 6,370 season pass holders every day, whether they are there or not. Kay actually addressed the controversy.  Well....he kind of addressed it.
"This will be my last answer to your question," he said. "What I tell you is this: We pay people in cash; we employ several hundred people in this area — not on attendance; we pay them based on revenues we generate. The most important number is the fact that we are able to employ a lot of people, and an independent study that concluded our 40-day meet generates $200 million in economic impact in the Capital Region." [Times Union]
If anybody knows what the heck he's talking about, please fill us in.  Look, when push comes to shove, it's not that big of a deal how they count attendance.  It's just a number, subject to random events.  It would be nice to be consistent from year to year; but whatever, it's not the end of the world.  The real issue here is credibility and, yes, transparency.  I think that NYRA is making a poor decision in sticking to its guns here, and by issuing defensive explanations ranging from insulting to incoherent. Nobody is buying it, anymore than anyone is buying that Andrew Cuomo didn't try to interfere with his Moreland Commission.  If anyone in this country actually cared about horse racing, it could be fodder for late night talk show hosts. The president is under fire again for failing to meet his enrollment goals for Obamacare.  But, did you hear?  They've called in The New York Racing Association for some help with increasing the count.

And the fact is, nobody is going to believe any of their attendance pronouncements from here on in. Attendance is up 10% at Saratoga so far, we're told.  Yeah, right, eyes roll. Over 30,000 at Longshots? Does that include people who use the bathrooms on the second floor?  I imagine that they really don't want have to announce a decrease in attendance after having raised the admission prices and taking flak for doing so.  But it's just not worth it.  Once you lose credibility in one area, people can reasonably question most anything you say.  I think they should reconsider their position, and be transparent about how many people are in the place.

As mentioned earlier, there was an incident at the board meeting involving members of the press who were initially denied entry into the meeting.  I'm honestly not sure exactly what transpired.  It was reported by Odato and others as if it was some kind of departure from past policy.  On the other hand, I'm told by somebody who regularly attends the meetings downstate that RSVP's are indeed required, and that IDs are checked at the door.  So I don't know; maybe the upstate reporters such as Odato - and also those from the Albany NBC affiliate WNYT, who were also amongst those not admitted - are used to just walking in.  Kay and the other board members seemed to be genuinely surprised that they were kept out.  But one thing that does not seem to be in dispute is that it was John Durso, Jr. who made the decision to keep them out....and then, after about 40 minutes, to let them in.
John Durso, the recently hired director of communications, who had turned down pleas from reporters seeking to enter the meeting despite not being on the RSVP list said he thought about it during the course of the meeting and decided to belately allow the journalists to come in. Asked why he changed his mind he said: “I made the decision. End of story.” [Capitol Confidential]
That brusque manner is already part of a pattern.  When Paul Post questioned the questionable logic behind Durso's defense of the attendance counting, Durso wrote: “I disagree with your premise and have provided my response.”  Oh.  Really?

Now, to be fair, WNYT reported that Durso later apologized, and called it a "miscommunication." Let's hope that that is closer to the tone that we'll be hearing out of NYRA's Media Relations department. Because they are supposed to have relations with the media that is covering the sport. Doesn't seem to be any point to take a hostile posture towards people trying to do their jobs; don't understand what he would be going for there. (Though Odato is another story....he's been a dick to NYRA for years.  But, still.) It's also way out of character for the position of Director of Communications there.  I've always known those with the title to have been affable and open.  (And remember, NYRA was amongst the first of racetracks to issue credentials to bloggers.)  So let's hope that an adversarial communications department is not what Chris Kay has in mind.

 - Marc Holliday is the newest NYRA Board member, replacing Jane Rosenthal, who never really seemed interested.  Nobody seemed to know that he was the replacement until his name plate was spotted at the meeting. Maybe the board is just a bit sensitive that the addition of Holliday makes it an all-white male one?

Holliday is the CEO of SL Green Realty, and he at one time had designs on the Aqueduct racino.  SL Green made a bid in partnership with Hard Rock Cafe.  His name pops up twice when searched for in the Left at the Gate archive.  From Sept 14, 2009:
“Hard Rock is the right balance,” [Pres/CEO Marc] Holliday said. “Its recognized brand and quality entertainment will attract younger and older players across the stratum. People flying in from JFK will say, ‘I hear there’s a Hard Rock, I want to see it.’”
There was a lot of talk like that back then, and it was all a bunch of smoke; just like the talk we're hearing from casino hopefuls now.  I don't at all get the feeling that Genting is relying on younger players, people from JFK, quality entertainment, nor anything other than its hypnotizing slot machines (more on that soon).

 - Just another reminder that I'm writing about racing at Saratoga over at the TimeformUS blog, in my Today in Racing column here.

Thursday, August 07, 2014

Meadowlands Casino Could Be the Beginning of the End

I was at the Meadowlands for the Hambletonian on Saturday.  I had last been there just after the new building opened and wrote about it here. There was no live racing that day, and only the first floor was open for simulcasting (and parts of even that floor were not yet quite finished).   As I wrote, it was OK; the same feel as the old building.  Just a typical ol' track, if a new, freshly-painted one with a lot of TVs.

But this was the first time I was there for live racing and the first time I saw any of the upper floors. And I'd have to say that it's a solid execution of what Jeff Gural intended - a facility with a bunch of attractive options for dining and drinking, and for entertaining friends or clients or employees. Particularly impressive amongst the dining/drinking choices was Trotters, a lounge/restaurant for members only (and where security was lax late in the day so I got to go in and check it out). Horsemen are encouraged to bring owners there when their horses race.  In addition to the other restaurants, there are also skybox suites with a great view of the action, along the lines of those at arenas, for groups of 10-60.

Where Gural really nails it though is up on the roof - the Victory Terrace. It's a large outdoor space with plenty of seating, a bar pouring generous drinks, and a great view of the racing.

Here's the view of the stretch drive of the Hambletonian, with Trixton edging away from Nuncio.

And here's another view.....hmmm, not quite sure what was going on here.

 I am not sure if they have live music up there, but they certainly could (and should).  And it stays open late - until 2 AM on Fridays. It's a fantastic racetrack hang; I ended up spending most of the day there.  I'd go as far as to say that it reminded me of what was perhaps my favorite racetrack hang ever - the terrace bar up on the top floor of the old Gulfstream clubhouse, overlooking the first turn. Ah, those were the days...

And while the crowd up there on Hambo day was perhaps not a typical one, it was most definitely a young crowd having a lot of fun.  In fact, it looked like those pictures of young people laughing and having a great time that you see on casino websites (even though you don't actually see it in the casino itself).

In all, it was a very good day; the track was crowded - the attendance was announced as 20,764 - which I presume is accurate and that they weren't counting anyone who had season tickets for the Nets when they played at the arena -  but not oppressively so.  And there were no issues with wireless or cell service anywhere in the facility.

Gural came down to the grandstand apron to be interviewed for the simulcast feed early in the card, and I was a bit surprised when the subject quickly turned to casinos.  He spoke about how the earliest there could be a referendum would be November of 2015.  While he is the operator but not the owner of the Meadowlands, he stands to profit either way; either as the operator of a casino or the recipient of a consolation prize of $100 million to reimburse him for constructing the new building. (Good negotiating there.)  This is a good article from last week on North, with a lot of information on a possible Meadowlands casino from writer John Brennan.

Well, a casino at the Meadowlands.....or even just the eventuality of one should it be approved via a vote next year......could very well be the tinder to spark the conflagration that will inevitably bring the whole casino house of cards in New York crashing down.  We've heard Sullivan County developers lament that an Orange County casino would siphon off potential customers from NYC given its proximity; the Tuxedo site, for example, is only 40 miles or so from midtown.  But the Meadowlands is 5 1/2 miles from the Lincoln Tunnel.  What kind of an effect would that have on a casino in either county?  (Though there are some times that it probably takes one longer just to get through the tunnel!)

Besides, the very second that a referendum passed in New Jersey, we'd start to hear the usual talk about having to keep gambling dollars in the state.  That would, without a doubt, lead to an acceleration in the timeline for a casino in or near the city itself.  Casinos downstate are not supposed to happen for seven years in order to give the upstate facilities a period of exclusivity to benefit the economies of the communities.....but that already went down the drain when Cuomo allowed Orange County to get involved.  When there are casinos at, as seems likely to me, Aqueduct and Yonkers, whether it's in three, five, or seven years, what is that going to do to the casinos upstate?  And to any upstate economies or employment that may have gotten a boost in the meantime?  Yes, we're told that the upstate casinos will be these grand facilities with many attractions for family vacations. But whether that would be enough to induce casino gamblers to travel surely remains to be seen.

Of course, this is all still quite theoretical.  A recent poll showed New Jersey voters to be quite tepid to the idea of casinos outside of Atlantic City (though a bit less so about one at the Meadowlands than at Monmouth) (not that those would be the only possible sites).
Only 42 percent of those polled favor the idea.
“New Jersey has a couple of reasons to be skeptical about opening new casinos outside of Atlantic City,” said Dan Cassino, a professor of political science at Fairleigh Dickinson and an analyst for the poll, in a report about the findings on the college's website. “Increased competition is only going to hurt Atlantic City more, and casinos just aren’t the revenue source for the state that they were ten or fifteen years ago.” [Star Ledger]
- Interesting story over the weekend in the Pittsburgh Tribune-Review about the effects of slots in Pennsylvania some ten years after they were legalized in the state.  It shows that, even if casino revenues are plentiful indeed, they don't always fulfill the promises that were made. 
Lawmakers promised homeowners an average of $300 a year in property tax relief when they passed the law legalizing 14 casinos statewide on July 4, 2004. The average turned out to be about $180, according to state Department of Education data.
Property tax cuts make up the largest single piece of the $9 billion casinos have paid in taxes, but billions more flow to county and municipal governments, subsidize horse racing, pay down Pittsburgh International Airport's debt, and cover the operating deficit at the David L. Lawrence Convention Center, Downtown, among other projects. Tens of millions of dollars goes to volunteer fire and EMS departments, police agencies, and drug and alcohol programs.
What really caught my attention here was that $9 billion figure.  At a 56% tax rate, that would mean that gamblers have lost around $16 billion in Pennsylvania.  We always read figures like that concerning projections or actual revenue; mentions of billions of dollars casually tossed around. What we never hear about is where that money comes from.  One might think that the money is simply generated out of thin air.  In fact, that $16 billion came out of peoples' pockets.

Now I'm no economist, but it seems to me that there just has to be a downside here that we never hear about in Executive Summaries of casino proposals.  Assuming that most of the money is disposable income on the part of the gamblers, wouldn't they be disposing of it somewhere else if not in a casino?  (Hopefully, not money intended for the supermarket, but we know that's not always the case.)  Doesn't there have to be some kind of downside in other areas of the economy?  Maybe politicians in Pennsylvania don't really care, if the gamblers are coming from New York or New Jersey.  But very soon, it's going to be one big regional casino community in the Northeast, and any cannibalization effect is going to even out.

This is, I suppose, what New York Comptroller Tom DiNapoli was talking about when he noted that:  "Such activity primarily represents substitution of spending on casino gambling for other consumer purchases or spending at other existing gaming venues."  Don't know what percentage is being substituted for which; but when you're talking about this much money, the "other consumer purchases" part has to be significant.  Yet DiNapoli's report was brushed aside; "for its utter lack of facts," by the Gaming Commission spokesperson.  But the "facts" of casinos in New York State remain to be seen.  And, given the current trends and the coming competition, I can't imagine that the picture will remain rosy for very long (if at all).