Green 'Thumb' Hinges on New York Revenue Model

Finger Lakes Gaming & Racing will add almost 200 video lottery terminals as part of a $4-million expansion, but a top official with owner Delaware North indicated major racing-related projects, such as installation of a turf course and perhaps a synthetic surface, are closely linked to the VLT revenue model in New York.

Finger Lakes, located in western New York, long has been a haven for New York-bred horses that have difficulty competing at Aqueduct, Belmont Park, and Saratoga. Some horsemen in the state have said a turf course at the track--called "the Thumb" because of its geographic location in the Finger Lakes region--would be a major asset to the state's racing and breeding program.

Ron Sultemeier, president of Delaware North Companies Gaming & Entertainment Corp., said the company's board of directors regularly studies a number of issues related to racing improvements. He said there have been backstretch improvements at Finger Lakes, but "major issues" are another matter.

"The two largest by far are do we go to an artificial surface and add a turf course at the same?" Sultemeier said. "Both are very expensive, and Finger Lakes is a small track. We have been able to do a little more backside work but haven't done major projects. These will be tough calls at tracks like Finger Lakes. The return on investment just isn't there.

"Do we discuss (addition of a turf course)? Yes. Has a decision been made? No."

Sultemeier noted what others in the racino industry have said for years: The state tax rate and the amount returned to racing will determine how much money is plowed back into the racing industry. New York has what is believed to be the highest tax rate on racetrack gaming in the country, whereas West Virginia, where Delaware North owns Wheeling Island Racetrack & Gaming Center, returns more revenue to operators and about double the purse cut for horsemen.

"We put in a $5.2-million kennel compound (for Wheeling Island Greyhound racing)," Sultemeier said. "It didn't make economic sense, but the VLTs have been successful. If we went forward, we wanted the nicest kennel compound in the country, and that's what we built. That's how we look at projects."

Dog racing in West Virginia is lucrative because of VLT revenue. Wheeling Island and Tri-State Racing & Entertainment Center near Charleston now have the highest Greyhound purses in the United States.

Sultemeier said Finger Lakes is adding 190 machines--for a total of 1,200--and building a new buffet restaurant because of customer demand. He said on weekends, when 70% of VLTs may be utilized at peak times, patrons may not be able to play desired machines. Saratoga Gaming & Raceway, where the VLT parlor is operated by Delaware North, also plans an expansion for similar reasons, Sultemeier said.

Since the first racinos began opening in the early 1990s, it has become clear gaming revenue far exceeds pari-mutuel revenue. Finger Lakes, which must compete with other harness racinos and Indian casinos for business, is no different.

"The big money hasn't been there yet," Sultemeier said. "New York is a different model--it's a lot tighter. We have to look at that with our business considerations."

Purses at Finger Lakes are averaging $106,000 so far this year, down slightly from $107,000 last year, but that was for a full season of racing. Before VLTs began operating, purses averaged $75,000.

Delaware North recently joined Empire Racing Associates, which is seeking the franchise to operate Aqueduct, Belmont, and Saratoga.