A casino proposal offered by New York Gov. Andrew Cuomo will "cannibalize" as much as 85% of the state's current gambling industry, hitting existing racetrack-based casinos especially hard, according to a trade group representing the racing industry in New York.
The New York Gaming Association, whose racetrack members now pay a state tax rate of about 67% on video gambling, said existing facilities cannot compete with the full-blown, Class III casinos Cuomo is proposing. Those new facilities would pay a 25% tax rate.
The governor's proposal calls for the first three of seven casinos being located upstate. Two upstate areas home to existing Indian casinos will be banned from having new Class III facilities because of revenue-sharing deals Cuomo recently made with the tribe's operating those casinos.
A downstate casino will not be permitted under Cuomo's plan until five years after the first upstate facility opens.
The gaming association said the state will end up losing $1 billion a year under Cuomo's plan by the hit existing gambling operations will take from being unable to compete against Las Vegas-style casinos that will be able to offer real slot machines, table games, and the extension of credit to bettors.
"As a consequence, it is not possible for NYGA to support the current proposed legislation," said James Featherstonhaugh, president of the gaming group. "We believe the only way to prevent the loss of major tax revenue and the stagnation of jobs is by permitting the five racinos not located near current tribal zones to operate under the same rules proposed in the new legislation.
"This would prevent the loss of tax revenue for our schools, result in the immediate creation of tens of thousands of new jobs, and spark billions of dollars of new investment."
Featherstonhaugh is also a minority owner of Saratoga Casino and Raceway, which is in one of the eligibility zones for a new casino.
The group also called on Cuomo not to enter into any deals with the Seneca Nation of Indians; Cuomo is threatening to bring in new casino competition if the tribe does not settle a $600 million revenue-sharing dispute with the state.
The NYGA said three racetrack casinos in western New York, including Finger Lakes Casino & Racetrack, should be allowed to offer the same betting devices now allowed in other areas of the state but not in western New York because of the tribe's exclusivity arrangement with the state.
The legislature's 2013 session is due to end the week of June 16. Lawmakers and Cuomo are hoping to have a final casino deal by then to present to voters for a November statewide referendum.