Commercial Casino Bill Introduced in New York

Legislation legalizing commercial casino gambling in New York was introduced early June 19 at the state Capitol. The plan that calls for locating the first of four new gambling facilities in three upstate regions and two video lottery terminal facilities on Long Island.

The legislation, to be voted on any day, would need approval by voters in a statewide referendum this fall, but it represent the final product of negotiations under way for weeks between Gov. Andrew Cuomo and legislative leaders. The bill seeks to ensure some order of protection for racetrack casinos in the state by a complex series of tax breaks, revenue-sharing formula changes, and creating a floor set at 2013 levels for payments to purse and breeding fund programs.

The Cuomo administration said the measure includes a provision that would let one VLT facility in each of three upstate regions if the November referendum is rejected by voters statewide.

"Today's agreement with the legislature would establish world-class destination gaming resorts to attract tourists to upstate New York, generating economic activity for local businesses and creating thousands of good-paying jobs where we need it most," Cuomo said in a release. "This legislation is a major step forward in our efforts to both capitalize on this economic development and tourism potential, and end the trend of letting neighboring states with legalized gaming take revenue that should be going to our schools.

"I look forward to continuing to work with my colleagues in the legislature to make this economic development 'game plan' a reality."

On June 19, industry groups and lobbyists were studying the bill for its impact on the racing industry. Senate Racing Committee chairman John Bonacic said lawmakers are committed to not undermining the nine racetrack casinos scattered around the state. Industry officials, though, wondered how much protection they might be given and whether business models are now in jeopardy in a way that could pose serious consequences for the racing industry in New York.

The Long Island VLT parlors could go in the backyard of Genting New York's Aqueduct Racetrack VLT casino. No precise locations were announced for the Long Island facilities, but they would be operated by the off-track betting corporations owned by the Suffolk and Nassau county governments. Each facility would be limited to a maximum of 1,000 VLTs.

If Genting had any concerns about the casino bill and possible competition from VLT facilities on Long Island, officials didn't show it June 19. Genting has been called a potential player in trying to bid for one of the casinos elsewhere in the state, and the legislation keeps out any major full-blown casino competition from downstate for seven years.

"We have reviewed the proposed legislation and fully support the governor's goals of upstate job creation and economic development outlined in the proposal," said Stefan Friedman, a Genting spokesman. "We are pleased to continue our partnership with the state that offers responsible gaming opportunities while creating good-paying jobs and continuing to provide substantial revenue for education."

Racetrack casinos face additional worry with the legislation. Their licenses to operate would all expire June 30, 2014, meaning they will have to go through a lengthy renewal process under the New York Gaming Commission.

The casino portion of the bill allows four casinos in three upstate regions: the southern tier area near Binghamton, the greater Albany area including Saratoga Springs, and the lower-to-mid Hudson Valley including the Catskill Mountains. No region can have more than two of the total of four authorized casinos, and most officials believe the Catskills could end up with two of the facilities.

The agreement includes language authorizing racing associations, franchises, and OTB corporations to apply to the gaming commission to offer advance deposit wagering. The entities can also enter into partnerships and joint ventures for account wagering programs.

The overall casino constitutional amendment voters would be asked to consider in the fall calls for permitting up to seven casinos. The deal at the Capitol addresses only the first four casinos, all of which must go upstate; where the remaining three might go is left vague, but for now, New York City would not be eligible for one of the casinos.

There would be nothing to stop the governor or legislators from letting an operator locate in New York City. The remaining three casinos could not be built for seven years after construction starts on the first upstate casino.

The commercial casinos, which could not go in three large sections of upstate where Indian casinos are now located, could be open 24 hours a day. Sports wagering is not permitted unless the federal government or courts approve of such betting. However, the new legislation does let casinos operate "sports pools" in special rooms.

The casinos would pay the state 37% to 45% of gross gaming revenue. The levels vary depending on which geographic area a casino locates.

Those numbers are up from the 25% Cuomo originally proposed. An upfront franchise fee payment, as well as which developers win casino rights, will be left to a selection panel that will report to the gaming commission.

Besides the upfront fees, each casino will have to pay the state $500 per slot machine or table game located in their parlors. Each casino license will last for 10 years.

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