New York: Close But No Cigar

New York’s Gaming Facility Location Board will soon announce which of 16 casino teams (the Hard Rock Casino in Rensselaer at left) will win gaming licenses in the state. Some speculate that saturation of the market in the northeast could cause the board to grant fewer than the four licenses allowed by a 2013 referendum.

Decision will not be made “in a vacuum”

New Yorkers will have towait a little longer to learn where up to four new commercial casinos will be located in the state. Sixteen applicants are bidding for the right to build resorts in three areas targeted for economic stimulus: the Southern Tier/Catskills region, the Albany area and the Catskills/Hudson Valley area.

The five-member board is weighing applications from some of the biggest casino operators in the world including Caesars, Hard Rock and Genting. But tumult in surrounding states may cause board members to err on the side of caution, and grant fewer than the quartet of Class III licenses called for in the first round of development.

Board members are all too aware that Atlantic City, which enjoyed a monopoly on gaming east of Nevada for almost three decades, has seen precipitous declines since Pennsylvania opened its first casino in 2007. The Trump Taj Mahal, a Boardwalk stalwart since 1990 and the last of three casinos bearing the Trump brand, is expected to close next month. If the Taj closes, it will be the fifth casino to go belly-up in the shore resort in a single year, adding some 3,000 people to the unemployment rolls.

Adding to the pressure, Pennsylvania regulators just licensed a second casino in Philadelphia, despite plea by officials at SugarHouse, the only other casino in the city, that slot revenues are flat. Massachusetts plans to open a trio of new casinos, and MGM is building a billion-dollar casino in Maryland.

The surge in competition has caused Connecticut’s tribal megacasinos to suffer severe reversals of fortune. Revenue projections show that by the 2017-18 fiscal year, Foxwoods and Mohegan Sun will collectively contribute just $191 million to state coffers, 44 percent of the $430 million they paid in 2006-07. And the state’s Office of Policy and Management and the Office of Fiscal Analysis predicts the casino payments will drop by 25 percent in a single year, from 2016-17 to 2017-18.

“With all the failures around the country, we don’t think New York state should be in the business of promoting this as economic development,” Cara Benson, member of a group fighting plans for a casino near Albany, told USA Today. “Just because you can award four doesn’t mean you should.”

But Dutchess County Executive Marcus Molinaro, who supports one casino in the Catskills and one in Orange County, close to New York City, says the state can still make a success of it. “You’re seeing casinos fail in areas where they’re saturated,” he said. “We think this region can support two.”

Mitchell Etess, CEO of the Mohegan Tribal Gaming Authority, says four upstate casinos can all make money. “The way they’ve done it—spreading the licenses out around the state—can work,” he told the newspaper.

In September, Kevin Law, chairman of the siting board, told Gannett’s Albany Bureau that state regulators cannot make the decision “in a vacuum.” Ultimately, he suggested, they may find it more prudent to award fewer than four casino licenses.

But Keith Foley, a gaming analyst at Moody’s Investment Services in Manhattan, told the Rochester Democrat and Chronicle, “It depends on what they build and what the expectations are and what the return profile is. You can build something that’s profitable.”

The 2013 referendum pushed by Governor Andrew Cuomo and passed by voters also calls for three additional casinos to be developed in other parts of the Empire State. They would open seven years after the first casinos have opened and become established.