New York State lawmakers have approved an accelerated timetable to site three additional Las Vegas-style casinos in New York City or nearby communities, a move that will set off a bidding war among the world’s top gambling companies who want to tap into a potentially enormous and lucrative marketplace.
In a major lobbying win for the horse racing industry, the new budget contains financial protections to ensure there will be no reduction or elimination of revenue-sharing payments that go now from video lottery terminal gambling operators if those facilities win licenses to become full-blown casinos.
Some lawmakers believe an advantage is held in the upcoming bidding process by the operators of existing video lottery terminal casinos at Aqueduct Racetrack in Queens and the MGM-owned Video Lottery Terminal facility and harness track in Yonkers in suburban Westchester County. The stated reason: they already have large VLT gaming facilities up and running and can more quickly develop their sites into full-scale casino operations with additional amenities.
The new state budget, which lawmakers approved overnight and into the morning of April 9 in Albany, envisions each of the successful bidders for the three remaining commercial casino licenses to pay the state at least $500 million in a licensing fee. That is half what the industry and some lawmakers recently believed could be obtained by the state by anxious developers looking to bring Las Vegas-style casinos to the nation’s largest population center.
It was unclear how the state ended up with the $500 million licensing fee arrangement projection.
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The deal includes financial protections for funding streams for purses and breeding and development funds for the Aqueduct, Belmont Parkand Saratoga Race Course. It also includes payments for NYRA’s capital expenditures and operations.
The final budget deal, which came together the evening of April 8 in Albany and was passed by the two houses some hours later, would maintain racing financial support payments from video lottery terminal casino proceeds—in the event an existing VLT facility, such as those at Aqueduct and Yonkers gets a new, full-casino license—at the same levels as in 2019. Annual adjustments would be made based on the consumer price index.
The casino legislation is a significant victory for the racing industry, which has been under fire by animal rights groups and some lawmakers who wanted the state to end the subsidy payments that go from existing VLT casinos, such as Aqueduct, to purses and breeding funds. Last September, a coalition was formed, called We Are NY Racing, composed of unions, businesses, trade groups, and others, to push back against mounting criticism the industry was getting from various entities and lawmakers.
Officials note that there is nothing in existing state law that would have ensured that money flow continued if a VLT casino was converted to a full-blown casino, as Aqueduct and Yonkers are seeking to do.
The New York Racing Association notes that the new casino measure ensures that money flow will continue for things like purses; Maintaining the payments are 2019 levels is important, officials say, because that was the highest-ever year for VLT support payments to the racing industry, and that further protections are in the new budget to ensure those payments grow at annual inflation rate levels.
Patrick McKenna, vice president of communications for NYRA, said the new state budget “clearly recognizes the importance of horse racing to the New York state economy.”
“Overall fan interest and engagement with New York racing has never been stronger, and the consistent support expressed by lawmakers in Albany will only further the sport’s role as an engine for economic opportunity that creates jobs in every corner of the state,” McKenna said in a written statement Saturday morning.
The final budget deal moves earlier by at least a year the timetable for the state to award three remaining commercial casino licenses under an arrangement from a decade ago that okayed a total of seven new casinos in the state; Four of the casino licenses were previously awarded to upstate locations, but the casino industry has been eyeing the big prize: New York City.
The legislation sets up a process for selecting the final three casino sites in the New York City area. Some believe the Aqueduct facility, run by Resorts World, and the Yonkers facility owned by MGM, will be able to more easily convince a site location panel to select them because they are already operating as casinos, though not with real slot machines or table games , such as poke.
If the backers of those two operators are correct, that leaves the real bidding fight for any range of proposed sites from midtown Manhattan to the outer boroughs. The final budget deal calls for some level of “community advisory” involvement, which would include representatives of the Legislature, as well as license period durations of at least 10 years and not to exceed 30 years.
Technically, the future casino facilities can be located in New York City, Long Island, and three suburban counties to the north of the city. Public hearings on the proposals must be held and a local panel must approve a casino sitting plan before it is sent to a state body for consideration. Local zoning laws would apply and there would be a minimum tax rate of 25% on slot machines and 10% on table games. It would set at $750 per slot machine the annual payments intended to support gaming addiction education and treatment programs.
Casino entities, in order to apply, must meet various criteria in order to apply, including demonstrating community support for their plan, paying the state $1 million to apply, and waiving the right to sue the state to recover any fees paid.
The legislation, which passed both houses of the New York Legislature as part of a flurry of state budget bills okayed, calls for the creation of community “advisory” boards. For New York City, such a board will be composed of six members: one each appointed by the governor, the senator, Assembly member, borough president, and city council member representing the area where a casino is proposed to be located. The city’s mayor also gets a representative on the board.
The state Gaming Commission, which will ultimately select the winning bidders, must issue requests for applications from bidders within 90 days after a majority of members of a local community advisory board are selected. The commission will also set a minimum capital investment for each of the remaining three casino licenses, which could include everything from how much the state wants developers to invest in a casino, hotel, and other amenities. A separate sitting panel will be created to review and make recommendations for the various flood of casino applications that are expected for the downstate area.
Sen. Joseph Addabbo, a Queens Democrat who has previously indicated his support for the Aqueduct and Yonkers racetrack facilities to be awarded two of the three future licenses permitted under the new measure, called the casino provisions “a win for New York State and the local communities where these licenses will go.”
Addabbo, chair of the Senate racing, gaming, and wagering committee, said the additional revenue to the state—including the $1.5 billion total license fee payments by the three future winning bidders—”will allow us to significantly fund important educational and gaming addiction programs .”
The senator said lawmakers, going forward, will continue to play a role in the casino process, including his desire to “ensure that the sitting process is being credibly implemented.”
The casino expansion was influenced by an army of lobbyists hired by casino companies, as well as politically potent labor unions.
Resorts World New York City, which operates the VLT casino at Aqueduct, said it is anxious to “leap forward” and win the rights to run a full-blown casino at the track. “We are ready, willing, and able to immediately double our workforce by adding more than 1,000 new union jobs and help the true potential of resort-style gaming, entertainment and hospitality be realized right here in the heart of Queens,” the company said of the new state budget’s casino deal.
New York a decade ago approved authorization for seven commercial casinos. The first four were located in upstate areas, but a moratorium was placed until 2023 on development of the remaining three licenses destined for the downstate markets. The new budget accelerates the timetable for the downstate casinos by a year.