March 27, 2018

The Update Desk: Casino Bailouts?

This is one of those rare posts that truly writes itself; I just has to pull the excerpts.

November 11, 2013:
Last Tuesday, New Yorkers overwhelmingly approved perhaps the most ridiculously worded, most biased proposal ever to appear on our ballot:
The proposed amendment to section 9 of article 1 of the Constitution would allow the Legislature to authorize up to seven casinos in New York State for the legislated purposes of promoting job growth, increasing aid to schools, and permitting local governments to lower property taxes through revenues generated.
A breakdown of the vote, as illustrated in this article by Michelle Breidenbach in the Post Standard, shows where the opposition to the measure came from: 
  • Ten counties in Western New York - Seneca gambling territory - voted no by between 50 -59%. Niagara and Monroe county results were 'undetermined' at the time the article was published; however according to the unofficial results, both are leaning no but by very small margins - less than 500 votes in Monroe, and only 250 votes in Niagara. 
  • Here in Central New York, four counties - Madison, Onondaga, Otsego and Tompkins - voted the proposal down; Oneida county was still up in the air but is leaning towards approval, albeit by only 401 votes. 
  • In the capital area, Albany, Schenectady, Saratoga and Warren counties all said no. Rensselear was leaning yes, by just over 700 votes, while Washington was saying no, by only 65 votes.
  • Further north, Hamilton county (118 votes) and Lewis county (369) were also leaning no.

And from June 22, 2014:
Enter Wilmorite, the Rochester developer who has long been engaged in Onondaga County as well: 
  • Think ShoppingTown Mall and Great Northern Mall, once glistening, booming retail establishments.
  • And think the proposed OnCenter Hotel, to be built downtown using the proceeds from a racino that Wilmorite wanted to build in Cicero.  
  • And think, more recently, of the defaulted mortgage on the old Sibley's building, which a local developer wants to get working on, and hopefully won't be delayed by Wilmorite's default. 
Onondaga County is already using casino gambling as an economic development tool. For example, some of the money the county is putting towards the seasonal concert amphitheater on the west shore of Onondaga Lake -- a crap shoot worthy of any Las Vegas high roller --  is an advance on our projected share of the money from Oneida Nation/Turning Stone agreement, so from that perspective I guess it makes sense that we'd at least think about gambling again with Wilmorite...

...Alas, as with most gambles, timing is everything. And so is picking the right horse. The fact that McMahon couldn't rally his troops and bring the vote to the floor means we missed the opportunity to support the deal, and it will hold (or fold) without us. That may be to our benefit, as it wouldn't look good on our resume if we backed the Wilmorite horse again - and lost, again.

And this, from July 2, 2014:
Finally, and this is sort of a non-Wilmorite wild card:  in its infinite wisdom, the New York Legislature passed a bill authorizing gambling at racinos until 6AM. Racinos are horse tracks that also have limited gambling, mostly video terminals.  Revenues are down at some of these places, and so our elected representatives decided that they can stay open another couple hours to try and get a few more bucks out of the folks who can't think of anything better to do in the wee small hours of the morning.

Hmm. Revenues are down at existing gaming facilities, at a time when we're proposing a major expansion of gambling?  How ironic...  

It'll be interesting to see how our new regional casinos will fare against this backdrop, and if the promise of last fall's constitutional amendment -- "promoting job growth, increasing aid to schools, and permitting local governments to lower property taxes through revenues produced" -- will come to fruition.


And, from November 24, 2017:
Fun times, right? Hopes were high back in those days. Not so much now, though. According to an article from earlier this month,  all three of the first licensees are underperforming. 
  • del Lago Resort and Casino, down the Thruway a bit from Syracuse, opened earlier this year with projected gaming revenue of $263M for its first year. As it stands, they'll probably fall about $100M short.
  • Rivers Resort and Casino also opened earlier this year in Schenectady, and is expected to fall about $80M short of its $222M projection.
  • Tioga Downs, which upgraded from a racino to a casino that opened in December 2016, had lower projections - $103M - and is also expected to fall short, by around $30M.
Tioga Downs owner Jeff Gural, who also owns the Vernon Downs Racino, has a different take on things, and focuses on the economic benefits of the casinos instead of on the less-than-projected revenues.
It's been a huge success. Whatever has been promised from an economic development standpoint has been delivered by the casinos. The real losers, frankly, are the owners of the three casinos. 
I would be remiss if I failed to mention that Gural asked for and received a bailout from the state to keep Vernon Downs open; it gets to keep more of the money that would have gone to the state, and they get to use capital improvement funds for operating expenses. The racino was losing about $5K a day, state officials were told; competition was one of the main drivers of the losses, Gural noted.

And from January 14, 2018:
NY legislators and Governor Cuomo don't seem to be too worried. For example, here's a fabulously irresponsible comment from Senator John Bonacic, the Mount Hope Republican who happens to be chair of the Racing, Gaming and Wagering Committee in the state senate, who noted in effect that developers always lie to get approval for their projects.
It was a very competitive process for four casino licenses, and of course their consultants were going to put rosy projections in order to get the Gaming Commission to hopefully give them a license. 
Gee, thanks for the oversight, Senator -- you do know that means oversee, not overlook, right?

For his part, our ever optimistic Sonofa Gov noted about the new casinos

They've all been wildly successful in creating jobs and building beautiful complexes.
Which, as we know, counts for everything with him. The state is littered with beautiful buildings created as part of these economic development, money-for-schools or tax revenue generators (but that's a whole nother post.)

And finally, today's update, from the Rochester Democrat and Chronicle:
The del Lago casino in the Finger Lakes is seeking a better tax deal from the state to address its struggling revenue - slightly over a year since it opened. 
Tom Wilmot, the principal owner of the casino, told USA TODAY Network's Albany Bureau on Tuesday outside the Capitol that he hoped state leaders would assist the casino. 
He didn't say specifically what the request was, but it appears the casino is seeking a lower tax rate paid to the state.
"I think we need some help at this point, and what the future holds, time will tell," Wilmot said. 
Whether the state Legislature and (our Sonofa) Gov. Andrew Cuomo will come to the casino's aid is uncertain. 
And (del Lago isn't) the only one: Rivers Casino in Schenectady is seeking a better tax package from the state, according to Assemblyman Phil Speck, whose district includes that facility. 
Time will tell, indeed. Time will tell.

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