RSS Feed for this Blog

Tuesday, September 09, 2014

Day 1 of Presentations Raises a Key Question

The first day of the oral presentations - by the Southern Tier and Capital District bidders - is history, and chances are that Day 2 is going on as you read this.  I did some live-tweeting during the day....and I'm at it again on Tuesday as well; nine presentations expected from eight bidders (Genting has two), and the action gets underway at 8 AM.

You can read the Twitter thread here if you're willing to do some scrolling, and I'll of course have more here in the days to come.   But, for now, a few of the Tweets, and then some thoughts:

Writing this on Monday night between games, so to speak, I'm wondering if things really are as we think they are.  I couldn't understand how/why Kevin Law, the chairperson of the siting board, kept asking the bidders if their estimates took into account the possibility of a second casino being awarded in the region.  I was absolutely incredulous, because, as we all know very well, one license each will be awarded to the Capital District and the Southern Tier, and two to the Catskills/Hudson Valley region. Right?

Well, not necessarily it seems.  I have to apologize - kind of - to Kevin Law for using words like 'embarrassing' and 'clueless' to describe what I thought was his clear misunderstanding of the casino law.  However, it is I who misunderstood; Mr. Law knows the law better than I, as he should. This is from the Gaming Commission's Power Point presentation on the law:

Indeed.  According to the law, there is no designation of any particular region as the one which will get two.  Where did we get that idea? Probably from the same place we got the idea that the Catskills was getting two casinos.  In fact, they are hardly even guaranteed least according to the letter of the law.

On the other hand, the reason why I'm only kind-of apologizing to the committee chairman is that Mr. Law just has to be well aware of the assumptions that everyone - and I mean everyone - has been operating under.....assuming of course that he has, of course, been immersing himself in all of the news and developments.  So, assuming that is indeed the case, I can't ponder why he would pose that question in that way.  The question drew some blank expressions.  Some mumbled about existing facilities such as Tioga or Saratoga harness.  It was only the final bidding team, the Rivers Casino in Schenectady, that pushed back and noted that they were assuming there would only be one award in the Capital District region.

So, what is it, Mr. Law?  Or maybe we should direct the question at the NY Gaming Commission? Do we need to assume that the 4th license is fully in play as written in the law?  Or is the general wisdom correct in that the Catskills/Hudson Valley region will get two licenses?  And, if the latter is not the case, why hasn't the commission cleared up a gross misunderstanding?  One that may be causing bidders to make incorrect assumptions in their projections?  Not only you think we'd have six bidders in Orange County if they didn't think there were going to be two licenses?  These companies put up a million bucks to apply (and who knows how much for the fancy consultants they hired to speak at the presentations) and I'm figuring they all did so under the assumption that they were bidding for one of two licenses for the region.  Or how about EPR Properties?  They are financing both the Adelaar project at the Concord, and Tioga Downs.  Under the general understanding, those two projects are not competing with each other.  But under the way the law is written, EPR is theoretically competing against itself.

 - After there were no questions about the community opposition to the Lago Resort in Tyre, I was pleasantly surprised when Law asked the Capital View team about the opposition in East Greenbush. He noted (incorrectly) that it was the only town where people were stirring up a fuss, and he asked about it, wondered where it was coming from and whether there were outsiders involved? Saratoga harness spokesperson Rita Cox replied that they have already made changes to the project in response to community input (they reduced the size of the hotel), that she didn't know where it was coming from (she knows exactly where it's coming from), mentioned the career fair, and said that they'll "continue" to reach out to the community (no, actually, they haven't, and I bet they won't).  One of the slides in their presentation noted that the support resolution was passed unanimously by the town board in June....not noting of course that one of the voters has since recused herself because her brother stands to profit, and another has changed her position, accusing the developers of a bait-and-switch based on the smaller hotel.

 - The Tioga presentation was pretty interesting.  Jeff Gural's team made a couple of admissions that none of the other six presenters did.  For one thing, they are assuming in their projections that there will be no organic growth in gaming spending, only a redistribution of existing revenue (with, of course, the familiar keep-it-in-the-state mantra).  In the presentation immediately following, Lago attributed part of their projections to "increased gaming behavior."  While the Southern Tier bidders all acknowledged that the majority of their revenue would come from the immediate area - 90% for Traditions and Tioga, 80% for Tyre - Tioga was the only bidder all day to acknowledge that money gambled by locals at casinos is money that would otherwise be spent on something else - "displacement of economic activity" as it was referred to.

As for Gural himself, well, he was Gural.   Besides saying that he hates gambling, I'm pretty sure he called Vernon Downs the best racetrack in the state.  He said that he wouldn't want his casino to be in a big city, because he'd prefer that people have to get in the car and drive a half hour so that they don't come every day and become problem gamblers.  When he admitted, under questioning by Bill Thompson, that only 900 of the projected 1200 permanent jobs would be new, he shrugged and noted that "we're allowed to present it like that."  I tweeted at the time that he was speaking like a guy who feels he's a lock.  I think in hindsight that he came across more like somebody who feels that he is entitled to it.  He even took the opportunity to point out the $600,000 that he spent to support the Prop 1 casino referendum.  He will be one astonished and unhappy camper if, for some reason, this does not go his way.

 - The Howe Caverns presentation was the least polished of the day; the only one without a video of any kind.  By insisting that the scientific methodology utilized to come up with their projections indicated that it's impossible for any casino in the region to do more than $185 million in annual revenue, they not only put some spin on their own number, but they took a not-so-subtle swipe at the competition, which they're not supposed to do.  All three of the other Capital District region bidders are predicting well north of that number.  They also discussed some creative financing schemes, including a federal "Immigrant Investor Program" called EB-5.  As we've discussed, the developers at Howe are proposing two water parks, one inside and one outside.  The water parks are no joke in this bid; it's an integral part of their strategy of drawing families, who, they say, will drive 3-4 hours to frolic in water parks.   Veteran casino developer Michael Malik was quite animated in defending this whole notion of it being appropriate to promote a casino as a family destination when questioned skeptically by siting board member Stuart Rabinowitz. 

OK, I could go on, but that's it for now.

1 Comment:

Cagnyeditor said...

Thanks for dispatches from a foxhole at the front