Cuomo Adds New Twist to Casino Expansion Plan

Gov. Andrew Cuomo is playing a new game of hardball with racetrack-based casinos in New York by sending them a simple message: Get on board with his plan to permit new casinos on non-Indian lands or face competition from additional video lottery terminal facilities located nearby.

The move by Cuomo, which came just days after a trade group representing the state's nine racinos publicly opposed the governor's previous casino expansion bill, came in a series of amendments to that earlier draft. The new bill language has been circulated to legislative negotiators in the past 24 hours.

The new provisions state that if a casino expansion referendum fails with voters this fall, a new VLT-only casino may be located in New York City, except Manhattan; new VLT facilities could also be located upstate near existing track-based facilities.

The plan poses a direct threat to Genting New York, operator of the successful Aqueduct Racetrack. Genting has been seen in Albany as having some of the deepest financial pockets if it wanted to oppose a casino expansion referendum vote.

But the governor's newest plan appears aimed at Genting and some of the other VLT racino operators with a threat that any opposition of his casino plan that leads to the referendum's defeat will still result in damaging competition for the limited flow of gambling dollars.

Cuomo spokesman Richard Azzopardi responded to a request for comment the evening of June 15.

"There are multiple drafts of legislation floating around, all of which are outdated," Azzopardi said. "That said, final legislation will anticipate what actions the state may take both if the referendum passes and if it doesn't. If the casino referendum fails, we will propose offering more high-end VLTs to combat the loss of revenue to neighboring states and secure new funding for our schools.

"The old detrimental approach has led to a racino structure with some racinos giving nothing back to the communities they are in. This is unacceptable. No racino was granted a lifetime monopoly. We were elected to act in the best interest of the people, not politically connected racino owners."

A Genting spokesman declined comment.

The constitutional amendment voters might consider as early as November is vague and calls for allowing up to seven new casinos in the state. A separate enabling bill is being negotiated at the Capitol to put details to the broader plan.

In the governor's version, he wants to locate the first four casinos in one of three upstate regions; three other upstate regions–in western, central, and northern New York–have been taken off the table because he cut revenue-sharing deals with Indian tribes in those areas that currently operate Class III casinos.

The regions eligible upstate for four casinos would be in the southern tier area near Binghamton, the Albany area that includes Saratoga Springs, and the lower-to-mid Hudson Valley region, including the Catskill Mountains. The remaining three casinos, presumably closer to New York City though not specified in the legislation, would not be allowed to open until seven years after the first upstate casino is up and running.

But if the referendum fails, Cuomo wants VLT parlors similar to those now run by the tracks in the Bronx, Queens, Staten Island, or Brooklyn, as well as the upstate regions that would have been eligible to get casinos under the referendum plan. The New York City facility could have up to 5,000 VLTs.

Adding further fire, Cuomo is proposing any new VLT facilities have to pay a 40% tax rate, more than 20% below what racinos now pay the state. Moreover, the new facilities would be licensed for periods of five years, with renewal options. Any existing VLT facility–there are nine racetrack casinos scattered around the state–would have to have its license renewed under a set of strict new conditions by June 30, 2014.

Cuomo added wording to his new draft bill that specifically states any of the new VLT facilities the New York Gaming Commission would select would not have to be affiliated in any way with existing Thoroughbred or Standardbred racing operations.

The governor has not hidden his anger with racinos during the debate; last year he suggested the way tax rates were set for the racinos and how the operator selections were made were borderline corrupt. He dismissed racino claims early on that they were best suited for any expansion from VLT parlors to full, Las Vegas-style casinos with new gambling options, including table games.

Cuomo has said he wants "destination resort'' casinos, and he has said some of the existing track-based operations do not fit that definition.

The enabling bill itself, though, is one giant loophole. If voters approve the referendum with its vague authorization, there is nothing to stop future legislative bodies and governors, including Cuomo, from changing the terms to allow casinos to located anywhere.

It is uncertain how hard Cuomo is pushing it or if he is merely using it as a negotiating ploy with legislators and track owners. The 2013 legislative session is scheduled to end June 20, and lawmakers appear not to be eager to extend the session.

Lawyers, in fact, can't even agree when the deadline is for action on the second passage by lawmakers of the resolution to amend the state constitution in time to ensure its placement on the November statewide ballot.