Tax cuts for New York’s struggling commercial casinos is not an idea that sits well with their tribal competition.
The Oneida Indian Nation, long-time operators of one of the state’s most successful gambling businesses, vehemently opposes them and has been the most outspoken of the tribes to date in saying so.
The tribe’s first salvo came immediately after the announcement last month that researchers were going to assess the proposal as part of a wide-ranging study of New York gaming slated for completion sometime in the spring.
“It is a scheme to get a lucrative bailout of enterprises that have mismanaged their own finances,” said Vice President of Communications Joel Barkin.
Under federal law Indian tribes are sovereign entities and therefore exempt from state taxation. New York’s seven tribal casinos, however, pay the state 25 percent of their annual slot win, not a tax per se, but “revenue-sharing,” as it’s called, and it’s an enormous cut compared with the run of tribal-state gaming agreements elsewhere in the country. In exchange they enjoy territorial exclusivity over large swaths of upstate New York. Or they’re supposed to. As they see it, the state has trampled on their monopolies not once but twice: a decade ago with the legalization of slots-only racetrack casinos, and now with the commercial casinos, full-scale operations with table games whose arrival they see as a violation of the spirit of the agreements.
It’s a grievance that’s had years to smolder, and it erupted in 2017 when the Seneca Nation, angry over the opening that year of del Lago Resort & Casino right on the edge of their exclusivity zone, halted the slot payments, claiming the obligation had expired. The tribe and the state have been fighting over it ever since. The sum involved is now well in excess of $250 million.
So far, lawmakers and the administration of Governor Andrew Cuomo have resisted calls for “rate equalization,” as it’s known, a phrase that’s gained currency the last couple of years when it became clear the commercial casinos𑁋one in Syracuse, one in the Catskills, one near Binghamton and del Lago in the Finger Lakes𑁋representing an aggregate investment in the neighborhood of $2 billion, along with thousands of jobs, were not going to attain the lofty financial projections that won them their licenses.
For one thing, while the upstate market is huge geographically, it’s mainly dependent on a handful of small to mid-size metro areas whose economies generally have been sputtering for decades and whose populations are aging and mostly shrinking. Which was precisely the pitch when the casinos were sold to the state’s voters back in 2013. They would be jobs creators and growth generators for areas badly in need of both. Only later did the realization set in that maybe 11 full-scale casinos, not to mention the existing racinos, nine at the time, and as many racetracks, were too many.
It appears also that the newcomers that built closest to the tribal casinos underestimated the resilience of their competition, which has been deeply entrenched for years: the Oneidas in and around greater Syracuse with their flagship Turning Stone Resort Casino𑁋to which they’ve added two smaller locations flanking the city on the east and west𑁋and the Senecas, dominant from Rochester west with three casinos drawing mainly from metropolitan Buffalo and Niagara Falls.
Not surprisingly, it’s del Lago, which opened almost exactly between Syracuse and Rochester, whose financial troubles have attracted the most attention.
But that’s on the newcomers, as the Oneidas put it in a sharply worded statement released when the news first hit that the study planned to take up the equalization question.
They made “massive and unrealistic promises to their shareholders and to the region, then consistently failed to meet their obligations,” Barkin said at the time. “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.”
For Albany, it is a genuine quandary. Tax cuts would not only entail the surrender of tens of millions of dollars in revenue for the state and the communities surrounding the casinos. It would mean the powers that be had misread the potential of upstate gaming, egregiously so, and placed jobs at risk in the process, not to mention damaging longstanding and lucrative relations with the Indians. It would mean acknowledging, too, that perhaps the economic arguments employed to justify the casinos in the first place were badly frayed.
The Oneidas seized on this late last month in an editorial attributed to Barkin that ran on syracuse.com, the website of The Syracuse Post-Standard.
“These same commercial casino owners are already paying New York state far less than what they said they would pay. In their applications for a gaming license, del Lago, Rivers (Casino & Resort in Schenectady) and Resorts World (Catskills, located near Monticello) each represented that they would pay the state and its taxpayers more than $80 million per year. But now, these owners are asking to pay New York state even less than what they are paying now, let alone what they had promised in their applications.”
According to the Oneidas, from October 2018 to October 2019, the tribe’s three casinos paid nearly $70 million to the state. During the same period, del Lago paid $47 million, Resorts World paid $57 million and Tioga Downs (Casino Resort near Binghamton) paid $27 million.
“These commercial casinos are making money,” Barkin wrote. “The issue here is not about laying off local workers. The only issue is about how much they will pay to sophisticated investors and bankers who are not from the area. They risked investing in these ventures, and now they want a taxpayer bailout because they made poor decisions.”
The casinos, knowing full well the stakes involved and anxious to avoid any collateral damage public relations-wise, are keeping a low profile on the issue. But they are lobbying. Their financial struggles can’t be divorced from their contention that the playing field is tilted against them.
It’s an argument not without some foundation, and it will become more compelling if those struggles continue.
