Tomorrow will mark seven weeks (or 49 days, but who’s counting) from Governor Cuomo’s delivery of his State of the State address wherein he revealed his vision of an expanded gaming business in New York. Everyone will recall that the governor announced that he would be supporting the development of three casinos in upstate New York. New York City and Long Island were apparently left outside looking in. What a difference several weeks, in the dead of winter, can make on what could be a transformative issue for New York.
Many of the leaders in the gaming sector have hired strategists and in some cases lobbyists to monitor the issue, not knowing whether they will end up supporting or battling against the expansion of casino gaming in New York. With stakeholders owning or planning new casinos in neighboring states, having a finger on the pulse of New York is critical.
The best example of how the New York market can create unrest throughout the region is Genting’s Resorts World casino at the Aqueduct Race Track facility in Queens. While other gaming interests were tired of a broken and suspect RFP process, Genting’s late entry (coupled with a $380 million check) was enough to land the deal. Although it is currently limited to VLTs, the margins and usage of the machines have surpassed even the most liberal forecasts. Moreover, while Resorts World has prospered, other casinos have not fared well as evidenced by the financial difficulties of Connecticut casinos, and the continuing decline of Atlantic City. By illustration, the new cornerstone destination casino in Atlantic City – The Revel – has run aground. After less than a year in operation the glittering gem has filed for bankruptcy. Imagine the impact of a Resorts World facility upgraded to include table games with millions of people only a short drive or subway ride away?
That proposition is not comforting to others in the industry that might see Genting as having favored nation status in New York. Already, “grassroots organizations” are beginning to emerge with funding by the dominant operators interested in maintaining the status quo in New York gaming – Native American tribes. The Seneca, Oneida and Akwesasne Mohawk tribes all own gaming facilities inside New York’s boundaries and all have the means and a litigious history that could complicate the governor’s plans.
New York remains behind the progress of other states in the northeast in gaming development. Pennsylvania, Connecticut and New Jersey have mature gaming operations. After new laws allowed casino gaming in Massachusetts, the commonwealth is in the midst of a methodical evaluation of casino siting and operator evaluation. The new frontier of northeastern casinos highlight the complexity of many macro and micro sector specific issues, from licensing fees and taxing structures to forecasts on market saturation. Those government officials who are bullish on New York gaming expansion see the entry of the Empire State into the mix as a game changer, where competing interests inside and near New York will be battling for runner up status. To get to that point, however, many pieces will need to fall into place in a difficult environment.
At the moment, the largest gaming companies are looking at the greater New York City region and Long Island as the only viable prospects. Indeed, casinos in these areas will be the jackpot in any siting and award process. Legislative leaders have all sent signals to the governor that consideration of casinos sited in certain areas of New York City and Long Island are needed. While there may be interest by some companies in the governor’s upstate destination casino vision, don’t be looking for grand transformative projects by industry leaders in Watertown or Utica in the near future. Industry leaders will tell you that the juice is not worth the squeeze.
In real time, and for the next 30 days, the governor and Legislature will be consumed with the passage of an on time budget prior to the April 1 legal deadline. In an effort to avoid interference with this year’s early religious holidays, the practical deadline is several days in advance of April 1.
In the meantime, like managers in spring training, the savvy players will be developing their strategy teams and girding for what is continuing to look like the seminal issue of the 2013 legislative session. Although it is early to put too much stock into polls on the issue, it appears that the current unknowns related to casino siting, i.e., where they will be located, are dragging down the public approval numbers to currently make the ballot measure a 50-50 proposition. If the issue does not receive clarity in advance of a ballot measure, opponents of expanded casino gaming will have a ready-made wedge issue to try and defeat the proposition.
The politics of a ballot measure become increasingly complicated as Election Day 2013 nears. The state political calendar this year is quiet with one exception. There will be a mayoral election in New York City to replace the formidable Michael Bloomberg. If the expansion of the casino gaming issue manifests itself as a contentious issue in the New York City mayoral race, look for interests on both sides of the equation to get involved early and often. Pro-casino interests can be expected to fill the coffers of mayoral candidates to neutralize the issue.
It may be nearly seven weeks since the governor’s State of the State address, but it is also barely more than eight months to Election Day on November 5, 2013.
Tick-tock.