Their financial performances were no secret during the year, but now the final numbers for fiscal 2014 are in and, for the first time, New York racetrack-based casinos showed their first year-to-year dip in net revenue.
The racetracks, which offer video lottery terminals only, are still making considerable money for the various stakeholders that get a share of the revenue, including the Thoroughbred and Standardbred industries, but the $1.905 billion in net revenue for the nine facilities dipped in the past fiscal year, albeit by a relatively small $7 million from the previous year.
Whether the numbers are driven by such factors as the beleaguered economy upstate, where most of the racetrack gaming operations are located, or a gambling saturation point in New York is up for debate. Either way the numbers come as New York prepares to award licenses to three commercial casinos that will be permitted to offer more gambling options than the tracks.
The tracks by law contribute money to purses. Based on a formula, VLT purse proceeds come out of the "agent commission" portion of the revenue pot; agent commissions dropped by about $2 million from the previous fiscal year.
The financial results reflect the period between April 1, 2014, and March 31, 2015. The performance numbers are based upon a review of public information released weekly and monthly by the state Lottery Division, which regulates and runs the state's racetrack-based VLT program.
Once again Resorts World Casino at Aqueduct Racetrack led the field with $816 million in VLT revenue, up from $793 million the previous year. Its daily win per machine stood at $447, far above the average of $290 in revenue per machine per day at all nine facilities combined.
Resorts World had 5,000 VLT devices during the fiscal year; overall, the state's nine racetracks had 18,000 VLTs. The win-per-machine numbers vary greatly from Resorts World's big showing per machine to the $146 daily win per machine at Vernon Downs Hotel, Casino & Racing and Monticello Casino & Raceway, both harness tracks.
The only other facility to show a year-to-year revenue increase was Batavia Downs Gaming, another upstate harness facility where VLT revenue was up $2 million to $49 million.
Finger Lakes Gaming & Racetrack, located south of Rochester and the only other Thoroughbred track besides Aqueduct with a VLT operation, saw its revenue fall from $131 million in 2013 to $123 million. The Empire Casino at Yonkers Raceway, which, at 5,300 machines, has the most VLTs in the state, posted a revenue decline of $7 million to $540 million in 2014.
The revenue picture at the Saratoga Casino & Raceway was again largely flat, a continuation of a trend of several years. Its revenue in fiscal 2014 was $158.5 million, down slightly from $158.9 million the previous year.
Revenue drops were also registered by Monticello (nearly $3 million to $58.5 million), Hamburg Gaming at Buffalo Raceway (from $73 million to $63 million in 2014), Tioga Downs Casino & Racing ($58.2 million to $55.7 million) and Vernon Downs ($43 million to $41 million).
Despite the revenue decline at nearly all racetrack gaming facilities, they shared an increasing reliance on a marketing device to try to attract and retain gamblers: free play. Overall, the amount of free-play allowances at the nine tracks in 2014 stood at $221 million, up from $188 million the previous year, $157 million in 2012, and $84 million in 2011.
New York State Gaming Commission spokesman Lee Park said the tracks in 2014 experienced "a very modest 0.4% decline" in total net win. He attributed the decrease to the slow pace of the nation's economic recovery, which has hurt gambling revenue across the United States. He also noted the fiscal year's fourth quarter showed a revenue bump over the previous year.
A precise number for VLT purse proceeds comparing 2013 to 2014 was not immediately available. Nearly 50% of VLT net revenue is transferred to the state's general fund, which then uses the money to help fund the state's 700 public school districts.
In the state's financial plan for the 2014 fiscal year, VLTs were expected to provide $944 million in education funds. The actual amount, according to numbers released the week of April 5, came in at $866.9 million. In 2013 VLTs provided $870.2 million in aid to education.
The fiscal plan—a 2015 plan has not yet been released—also shows some warning signs for VLTs: continued weakness in 2016 and revenue dropping another 3.5% in the 2017 and 2018 fiscal years.
The 2014 VLT performance came as lawmakers are seeking ways to prop up the industry. Last year the state legislature began letting the facilities operate longer hours each day, and more recently lawmakers and Gov. Andrew Cuomo approved the installation of new electronic games that, according to the legislation, permit an element of skill to be incorporated into such games as VLT poker. Critics already have questioned the legality of the new provision.
The head of the trade group representing New York's racinos was unmoved by the final numbers for the last fiscal year.
"I think the industry is stable. I think the dip, if you will, has several possible influencing factors, the big one being weather,'' said James Featherstonhaugh, president of the New York Gaming Association and an owner of Saratoga Casino & Raceway.
"The market in New York has matured, and I think 'leveled' is probably the new normal as opposed to the kind of regular increases we saw before that,'' he said.
Featherstonhaugh noted that the older racinos, such as Saratoga, have already seen revenues remain largely stable the past few years. The Batavia facility was helped by a major renovation of its facility while Resorts World is still a relatively new phenomenon in the New York City area.