New York Gov. Andrew Cuomo's plan to create gambling competition for racetrack-based casinos was a topic of an hour-long, closed-door meeting June 18 with legislative leaders trying to end the 2013 legislative session. Lawmakers said a casino deal could be hammered out by the end of the day.
The governor has been opposed to tracks getting any advantage in being selected for a possible expansion of up to seven new casinos he and lawmakers are negotiating and hope to send to voters for a referendum this fall. But lawmakers said they are concerned the Cuomo plan, which also calls for locating video lottery terminal gambling halls in New York City and upstate if the November referendum fails, will eat into the successful revenue-making operations of existing facilities.
One key lawmaker said only final details of the casino expansion remain to be negotiated, and that a tentative gambling deal has been reached.
"It's the closest we've been to having a meeting of the minds to move forward,"said Sen. John Bonacic, a Republican who chairs the Senate Racing and Wagering Committee.
Under what lawmakers were calling a tentative deal the afternoon of June 18, four casinos would be allowed to locate in three upstate regions: the southern tier near Binghamton, the greater Albany area including Saratoga Springs, and the lower-to mid-Hudson Valley including the Catskills. Bonacic, who represents the Catskill region,, believes that region will get two of the four casinos.
Where the other three casinos might go that are contemplated under a constitutional amendment officials hope to present to voters this fall remains uncertain.
If the referendum fails, video lottery terminals would be permitted in those three upstate regions as well as one each in Nassau and Suffolk counties on Long Island, Bonacic said.
"This was the governor, in his mind, keeping the racinos honest in supporting the referendum," Bonacic said. "I personally don't like it. I would prefer it not be there. Have a clear up or down vote on the casinos based on the merits, but the governor is insisting on doing it this way.'"
The tentative deal coming together June 18 calls for no VLT facility in New York City if the referendum fails; Cuomo had proposed one be located in the city, though not in Manhattan.
In the Assembly, lawmakers are privately grumbling because, sources said, Cuomo aides have shown them details about political donations they have received from racetrack casino operators; the move allegedly was done as a not-so-subtle way of ensuring the measure has the votes to pass in the Assembly.
The developing agreement also raises what Cuomo had proposed as a 25% tax rate to be paid by casino developers to about 40%. If a casino locates in a region with a racetrack casino, which would be a certainty under the plan, the tracks with VLTs would see their existing 67% average state tax rate dropped to some level of parity with the new casinos.
"You cannot afford any cannibalization of the racinos," Bonacic said. "They're important partners of the state, giving more than $800 million a year to state education. You can't hurt them at all."
Bonacic, who was seeking to have three casinos in the Catskills, as first approved by lawmakers a decade ago, said he will push for passage of the enabling bill and the constitutional amendment.
"To the governor's credit, the people are going to have a chance to decide statewide. It's never been done before," he said.
Bonacic also said the Senate as early as June 19 will consider and likely approve four individuals Cuomo earlier this year nominated to serve on the New York Gaming Commission, an agency that came to life six months ago as a result of a merger between the former Racing and Wagering Board and Lottery Commission.
The four members will provide a quorum necessary for the board to legally act on a number of matters. The commission is set to play a major role in the selection of casino vendors if Cuomo and lawmakers approve a final gambling package the week of June 16 and if voters approve the idea in November.
Senate co-leader Jeff Klein, a Bronx Democrat, said the racetrack casinos have been proven money-makers for the state. "I don't want to hamper (their) ability to do that by generating more competition," he said after meeting with Cuomo and other legislative leaders.
The governor's latest plan calls for locating four of the initial seven casinos in three upstate regions. Three other regions have been taken out of consideration because of revenue-sharing deals struck with Indian tribes already operating in those areas.
Any downstate casino would have to wait at least seven years for a license under the Cuomo plan, which is based upon the assumption casino operators would only want to locate in the more populous downstate region. Cuomo has called his casino plan an economic development tool for the struggling upstate economy.
Under one plan being eyed, sources said, racetrack casinos would see their state tax rates–now about 65% of gross gaming revenue–be lowered if a casino or VLT facility is located in some undetermined proximity to their operations. Also on the table is a plan to let tracks stay open 24 hours, and to let them add more VLTs as a way to compete with future casino development.
"I think there's somewhat of an issue with racinos we're trying to resolve," Senate co-leader Dean Skelos, a Long Island Republican, said after the June 18 meeting. "But I think we're making progress, and we should get it done by the end of the day."
Skelos is pressing to permit up to two VLT facilities on Long Island to be run by the off-track betting corporations owned by Nassau and Suffolk counties. Among the opponents of that idea is Genting New York, which operates the successful Aqueduct Racetrack VLT casino.
When asked to describe Cuomo's view of VLTs on Long Island, Skelos said: "I don't think he's necessarily opposed to it but it is part of the total picture right now."
The governor June 17 issued a scathing attack against the racetrack casino industry in New York. While speaking on public radio, he said the tracks "expect another gift like the first gift they got" more than 10 years ago when New York first legalized VLT parlors at tracks. He said many of the companies are "politically connected," and that VLT approval was often won because of what he called "political deals."
New York's largest racetrack casino is at Aqueduct, which, along with Belmont Park and Saratoga Race Course, is run by the state of New York under a three-year restructuring program of the New York Racing Association.
Cuomo defended the idea of going ahead with a VLT expansion even if the seven-casino referendum loses this fall. He said the state is "not going to go away" and tell gamblers to go to Massachusetts, Pennsylvania, or New Jersey if the referendum fails.
"We'll do more VLTs," Cuomo said. "This is income that could go to education."
A portion of the VLT revenue goes to the New York Lottery Division through a funding program that supplants money for education that would otherwise have to come from the state's general fund.
A coalition of track-owned VLT casinos recently came out in opposition to Cuomo's casino bill. The tracks said they cannot compete with full-blown casinos offering real slot machines and table games.