The prospects for a Las Vegas-style casino in New York City could loom large in the months ahead as Governor Andrew Cuomo and the state legislature struggle to come to grips with the financial fallout from the pandemic.
“We get the sense that broader gaming expansion has become a far more important front-burner issue than it has previously been,” Deutsche Bank gaming analyst Carlo Santarelli said in a recent note to investors. “Given both the state tax ramifications, as well as the job creation, we believe the prospects for a New York City area destination resort casino are likely to appear brighter in 2021 than any time prior.”
A 2013 referendum by New York’s voters authorized up to seven full-scale casinos but sealed off New York City with a 10-year moratorium designed to ensure the success of the four casinos that would open upstate in the years that followed.
Up to now, pro-gaming forces have concentrated on the legalization of remote sports betting but have failed to move the issue in the face of opposition from the governor’s office.
Similarly, Cuomo has been cold to efforts by industry giants of the likes of Las Vegas Sands and MGM Resorts International to scrap the New York City moratorium.
But in the midst of the Covid crisis, with the state now facing a four-year budget gap estimated at $70 billion to $75 billion, reports are that the governor may be rethinking his opposition on both counts, and that once the numbers are crunched in more detail, the casino option may prove far more appealing financially.
As it stands, sports betting currently is limited to on-site books in the four upstate casinos and their tribally owned competitors. And it’s been anything but a financial bonanza. Results from the privately owned properties show revenues topping out at around $2.6 million a month.
Experts agree that remote betting would be far more lucrative. In neighboring New Jersey, where it’s legal, almost 94 percent of the $931 million wagered in the state in November came from online or mobile phone sources.
New Yorkers are believed to be contributing around 20 percent of New Jersey’s volume. Which sounds like a lot, but from a bottom-line standpoint may not be as impressive as it sounds, at least according to Santarelli. He estimates that current market forecasts indicate a tax on mobile wagers of between 8 and 13 percent would contribute $75 million to $125 million to New York’s treasury, or ”roughly 1 percent of the annual run rate deficit.”
Research by industry consultants Eilers & Krejcik Gaming essentially concurs. Based on their estimate of what New Yorkers bet in New Jersey last year, $837 million, the books there would have won around $57 million, of which around $6 million would have been paid in taxes.
A casino on the scale of what Las Vegas Sands proposes, on the other hand, could reward the state with upwards of $1.5 billion a year, according to LVS.
“We believe Las Vegas Sands could spend upwards of $5 billion on this project and generate not only considerable recurring gaming tax revenue, but also add nicely to job creation,” Santarelli said.
In the meantime, pro-gaming lawmakers say they’ll be stepping up their push for remote betting.
“We’re running out of time for this year, so now we look at next year,” state Senator Joseph Addabbo told industry news site Legal Sports Report. “But I can’t see us waiting until the April budget.”
