Long Island’s Suffolk OTB plans to buy Delaware North out of its management contract for the region’s lucrative Jake’s 58 casino hotel for $120 million.
Since opening in the Long Island town of Islandia in February 2017, Jake’s has been one of New York’s most successful VLT venues and proved instrumental in rescuing Suffolk OTB from a bankruptcy reorganization that dated back to 2011.
Suffolk owns the complex but until recently its financial troubles prevented it from investing in it, and it was Delaware North that ponied up $40 million a few years ago to purchase an adjoining Marriott hotel in order to fold its 228 rooms into the business.
Relations between the OTB and the Buffalo, N.Y.-based operator have been anything but smooth, however, and for years the two squabbled over their respective shares of Jake’s revenues, and it wasn’t until early 2020 that the two finally were able to settle their differences out of court.
The OTB, meanwhile, has been paying Delaware North an annual management fee of $13 million and has been eager to get out of the contract, which wasn’t due to expire until 2067.
Jon Schneider, a spokesman for the OTB, said the takeover will benefit Suffolk County taxpayers by cutting costs and putting more cash into county coffers.
“Simply put, ownership of the Jake’s 58 property and management of the casino hotel will put Suffolk OTB in a position to contribute more money to Suffolk County than it otherwise would, a benefit that will only grow in time,” he said.
Since reopening in September after a six-month Covid closure, the casino’s 1,000 VLTs and electronic table games have generated more than $1.74 billion in bets and around $122.3 million in revenue, 45 percent of which is earmarked for New York’s public schools.
Suffolk officials, however, aren’t sure they like the takeover’s price tag, and they plan to hire a gaming industry consultant to look the deal over.
“We expect OTB to honor the county’s request to allow time to conduct an independent review to ensure that Suffolk taxpayers are protected,” County Executive Steve Bellone said. “This is a reasonable and prudent position before OTB decides to assume a massive amount of new debt.”
