Some critics of the New York State gaming landscape say tribal casinos enjoy an unfair tax advantage in the form of revenue-sharing payments that are much lower than the rates levied against their commercial competition. Some kind of fix may be in works for next year. That’s when things could get messy.
Researchers with the New York Gaming Commission will weigh in on the status of the industry, including tribal and commercial casinos, racetracks, racetracks with casinos, off-track betting and lottery outlets, along with a range of knotty issues surrounding a possible expansion into internet gambling and expanding sports betting online.
Headline-generating topics also will include the planned expansion of Las Vegas-scale casinos to New York City and other downstate areas where they don’t operate currently.
But none will kick up more dust than the question of whether gaming tax rates should somehow be equalized.
The commission is reviewing proposals from several prospective contractors and is slated to select one to conduct the study by the end of the year. If that happens, the results are expected in June.
And that’s when the tax issue will begin pressing some especially hot buttons.
The problem is that New York’s four commercial casinos have failed to deliver the revenue boost the state treasury and everyone else expected, missing their own revenue forecasts in each of the three years since they entered the market beginning in 2016. Two of them—del Lago Resort & Casino in the Finger Lakes and Resorts World in the Catskills, representing thousands of jobs and more than $1 billion in combined capital investment—have undergone ownership changes in the midst of particularly dire straits financially.
This, in turn, has cast a spotlight on the tribal competition, which is taxed at lower rates, although “taxed” is a misnomer because Indian tribes, sovereign entities under federal law, are immune from state levies. Rather, the three New York tribes engaged in casino gaming—the Oneidas, Senecas and Mohawks—pay the state 25 percent of their annual slot machine revenues under the terms of federally mandated compacts that grant them exclusivity over wide swaths of territory surrounding their operations.
The four commercial casinos pay an additional 10 percent tax on the revenue from their table games and sports betting, plus their machine games are taxed at higher rates: 37 percent in the case of del Lago, which is located between the exclusivity zones carved out for the Oneidas and Senecas, and Tioga Downs Casino Resort, located near Binghamton in the south. Resorts World Catskills in Monticello pays 39 percent. Rivers Casino & Resort in Schenectady pays 45 percent.
Rates also vary among the eight racinos. They’re limited to video lottery machines, which are slot machines for all intents and purposes, as far as consumers are concerned, and represent yet another source of competition.
The idea of leveling the playing field by raising the tribes’ contributions is a no-go legally. Still, the likelihood is strong that they’ll push back against any adjustments that substantially lower the rates paid by the commercial competition.
The bad blood between the two sides already has figured in a decision by the Senecas, angry over del Lago’s 2017 opening at the western edge of their exclusivity zone, to stop sharing revenue altogether. The tribe, which operates casinos in Buffalo, Niagara Falls and Salamanca, claims their obligation ended with the expiration of their original compact in 2016. The state, which to date is out more than $250 million in payments as a result, argues that a seven-year compact extension negotiated a decade ago means the payments are still in force. An arbitration panel has sided with the state, but the Senecas are challenging that ruling in federal court.
The Oneidas, meanwhile, have issued a statement defending their right to negotiate separate compact terms, blasting the idea of rate equalization as a “bailout” and a “scheme” to “alter the state’s carefully crafted gaming rules.”
“The existing rules were the product of months of negotiations, and the Oneida people made significant financial and legal sacrifices to reach a deal with the state and counties, at significant cost to our operations,” said Joel Barkin, the tribe’s vice president of communications.
“The Oneida Indian Nation has held up its end of the bargain and is now proud to be generating more than $70 million this year alone to state and counties, and we have never asked to renege on the deal,” he said. “By contrast, commercial casinos have made massive and unrealistic promises to their shareholders and to the region, then consistently failed to meet their obligations. The solution for them is to get their houses in order and not give them yet another taxpayer gift that could drain even more public revenues from our state.”
