NY Racetrack Casinos Preparing for Changes

The licensing process is expected to be much tougher next year.

The operator of the new Aqueduct casino has given a large, timely contribution to the Democrats in charge of the state Assembly, which will have a key role in whether racetracks are given the right to expand existing video lottery terminal parlors into full-fledged casinos.

The $20,000 donation by Genting New York to the Democratic Assembly Campaign Committee came just two days before the Nov. 8 election, in which Democrats were looking—unsuccessfully as it turned out—to pump up their numbers in the 150-member chamber.

The donation also came a couple of days after an out-of-the blue and critical letter was sent by top officials from the Cuomo administration putting all New York tracks on notice that their annual license renewal procedures will be taken more seriously by the new administration than previous governors.

The letter was also seen as a first shot by Democratic Gov. Andrew Cuomo in next year’s battle over how and whether to expand casino gambling in New York beyond the current Indian-run facilities scattered in several locations upstate. A state official said no final determination has been made by Cuomo, but that the governor is strongly leaning against a “site specific” plan for casino locations.

Such is the plan being pushed by a consortium of racetrack operators that believe they can best get a constitutional amendment passed by voters by expanding their existing gambling offerings to table games and other features rather than trying to site new facilities in communities that don’t have gambling halls.

Democratic Assembly Speaker Sheldon Silver has already signaled he could be fine with letting Aqueduct join other tracks in getting expanding gambling opportunities; Genting is one of the major forces pushing the idea and has signaled it wants to bring in different forms of gambling to the casino that opened in late October after 10 years of delays.

But the Nov. 4 letter from the Lottery Division and New York State Racing and Wagering Board sent a chill across the state’s racing industry. The letter, first reported by the Albany Times Union, said a new process has begun in which both state agencies will be signing off on annual license applications by tracks. The racing license is mandatory not just to offer racing, but also for the right to run VLT parlors at the tracks.

“Once granted, a racing license is not an ongoing entitlement,” wrote lottery director Gordon Medenica and racing board chairman John Sabini. “The license is a privilege, issued only upon satisfaction to the board that the public interest will be served.”

The letter said the board is considering an “open competition process” for the re-awarding of licenses that are lost by tracks for failing to meet certain standards, including financial health, experience, and general fitness. “The board is also considering whether all track licenses should be subject to an open competition for determining licensure for the 2013 calendar year,” the letter states.

It is uncertain how far the open threats by the two key regulatory agencies—the racing board  oversees racetracks while the lottery agency has jurisdiction over track VLT operations—will actually go or if they are part of the jockeying certain to come up at the Capitol over the next six months on the gambling expansion issue.

All of the state’s racetracks received the letter. Despite the contents of the three-page missive, it sought to end on a happy note: “We appreciate your continued cooperation and look forward to working with you to ensure that racing and gaming remain strong and vibrant in New York.”

Track-based VLT operators have been increasing their political contribution activities this year, and have formed a group, the New York Gaming Association, to press their cause at the Capitol. Saratoga Gaming Resources, a subsidiary of the harness track and VLT operation in Saratoga, donated $35,000 to Cuomo earlier this year.

The Blood-Horse recently reported Genting has retainers costing $1.5 million this year to be represented by politically connected lobbying firms in Albany.

Industry officials speaking privately since the letter was sent last week said subsequent talks with the administration have struck a more positive tone.

But the matter was serious enough for one track operator to inform federal regulators–and its investors– about the letter. Empire Resorts, which owns Monticello Casino and Raceway, noted the new state policy in its quarterly filing on November 10 with the U.S. Securities and Exchange Commission. Empire pointed out, in a section of its SEC filing titled "Subsequent Events,'' that the racing board and lottery agency will, for the first time, be jointly reviewing annual track license renewal applications and that the state is now warning operators about the potential for an open bid on all track licenses in 2013.

Empire said in its SEC filing that it will “vigorously pursue the renewal of its racetrack and simulcast licenses.’’