HomeThe ShuffleOnline Gaming, Casino Bailout Axed from N.Y. Budget

Online Gaming, Casino Bailout Axed from N.Y. Budget

State budget negotiators in New York have agreed on a spending plan for the new fiscal year that does not include online gaming or tax relief for a fledgling commercial casino industry that is struggling to meet its revenue goals.

It’s the second year in a row that i-gaming proponents came away from the negotiations empty-handed, and again it happened in spite of strong support in the state Senate, which has passed legalization bills in each of the last three years and included online poker and sports betting in its version of the 2018-19 budget, which covers the period from April 1 to March 31 of next year.

And, as in previous failed attempts, it was the Assembly that chose not to act. The Senate’s budget provision failed to come to a vote in the lower house, where Mt. Vernon Democrat Gary Pretlow, who occupies a key position as chairman of the Racing and Wagering Committee, declined to throw his support behind it.

Governor Andrew Cuomo also has expressed reservations and that, coupled with a host of regulatory complications, doomed the issue for purposes of the budget, where controversial or otherwise politically divisive proposals tend to get left on the shelf.

That said, considerable hope remains that the Legislature will move quickly to regulate remote betting on sports, provided the U.S. Supreme Court acts favorably on New Jersey’s challenge to a 25-year-old federal law that bans sports wagering in all but four states.

The impetus come could, ironically enough, because lawmakers refused to include a casino rescue in the new budget.

New York’s densely crowded gaming market has proven a greater competitive challenge than expected for the three privately owned casinos that opened between December 2016 and February 2017. All have fallen well short of first-year revenue projections, which means they’re generating considerably less money for the state, which taxes them at a rate of 37 percent of slot revenue and 10 percent of table game revenue.

del Lago Resort and Casino in the Finger Lakes missed its first-year forecast by more than $100 million, prompting General Manager Jeff Babinski to announce his resignation at the end of the last month. Rivers Casino & Resort in Schenectady, whose first general manager, Mary Cheeks, quit last November, missed the top end of its forecast by nearly $70 million. Both sought tax relief in the new budget. Both were rebuffed.

del Lago, which is surrounded by six tribal casinos, should have taken the competitive landscape into account, said Pretlow, who opposes any bailouts. “I think it was a bad business decision to move there in the first place, but they knew what they were doing when they got into it. They made their bed, basically.”

Of the other two new casinos, Tioga Downs Casino, located near Binghamton on the Pennsylvania border, has missed its initial projections by similar margins. The newest of the group, Resorts World Catskills, which opened last month near Monticello, is reported to be generating revenues in the same range as del Lago and Rivers, which doesn’t bode well either, given that it’s the largest of the four and was the costliest to develop.

Cuomo, a Democrat, was an early and enthusiastic supporter of commercial casino expansion, and it could cost him politically if the experiment backfires. In addition to the disappointing tax haul the expansion has sparked a dispute with the Seneca Indian Nation that is costing the state and several cities tens of millions of dollars in lost revenue from the tribe’s casinos. Facing what is likely to be a tough bid for re-election in November the governor is under mounting pressure to distance himself from the industry. Not surprisingly, he opposes talk of a bailout.

As he put it recently, “The upstate gaming casinos are private concerns. They bid, they made an investment, and some of them will say they’re not doing as well as they hoped or would have expected but they’re private concerns, and I don’t want to get into the business of bailing out private concerns.”

Which is why sports betting is starting to look good for all concerned. The Senate bill currently under consideration is designed specifically to benefit the four casinos by establishing a regulatory framework for them to take bets both on-site and remotely via computer and mobile phone. But it covers a major political concern as well by giving racetracks, racinos and OTBs a piece of the action, allowing them to partner with the casinos in offering affiliate betting stations and registration for their patrons to access the online and remote platforms.

The bill’s author is John Bonacic, who chairs the Judiciary and Racing, Gaming and Wagering committees and is a leading voice in the Republican-controlled upper house. As sponsor of the 2013 constitutional amendment allowing commercial casinos, and representing a district that includes the Catskills, he, too, has some political capital on the line.

Whether it proves enough to get Pretlow on board remains to be seen. So far, he’s reacted positively.

“I want to make sure the off-track betting and racinos were able to participate, and the way this legislation is worded makes that possible,” he said.

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