By Karl J. Sleight
As we expected, 2014 was dominated by New York’s foray into the non-Native American private sector casino market for the first time in state history. In a compressed and efficient process the state named members to its siting board (February), released a request of applications to operate a casino (March), accepted responses from 16 bidders throughout the state (June), held public hearings (September), and made recommendations for three projects to receive licenses from the state (December). In the end, New York stood in strong contrast to its neighbors, such as Massachusetts, on how to run an effective casino site selection process. On the equine side of the equation, the New York Racing Association reported operating in the black for the first time in recent memory. The market for New York-bred horses was vibrant and continued to grow significantly. What will 2015 hold? Here are our thoughts.
In the world of New York casinos, the three “C’s” will mark this year: Character, Construction and Competition.
The three successful applicants that garnered the recommendation of the Gaming Facility Location Board (siting board) will all take the next steps in the regulatory process with the state Gaming Commission. A more granular character vetting process will unfold for leaders of projects in Sullivan, Schenectady and Seneca counties. All of these projects are led by well-known and respected developers. Expect the same kind of efficiencies here that marked the site selection process. Licenses should be granted by the commission after the vetting process is completed, which could be done by the end of the second quarter 2015. Once the licenses have been issued, the projects are on the clock to be operational within two years. Speed to market remains very important as New York is competing in a crowded Northeastern market, and Massachusetts and Northern New Jersey are expected to come online sooner rather than later. Speaking of New Jersey, the death spiral of Atlantic City will accelerate discussions of statewide expansion there, and the Garden State will have no choice but to open up areas of the state to gaming. Think Meadowlands.
Construction will begin at the three sites and ramp up significantly during the second half of 2015. Trade union workers will be employed at all of the projects making for a very happy holiday for them at the conclusion of 2015.
Competitors will not sit still and let the newcomers siphon off customers to these new projects. Look for marketing blitzes and new attractions by existing casinos to try and maintain market share. This could be particularly intense in the Capital Region of New York, where the Saratoga Raceway and Casino (30 minutes away from the Schenectady project) is adding a hotel. The Oneida Indian Nation is less than two hours to the west and has floated the idea of a new outlet shopping center, and the robust $800 million MGM project in Springfield, Massachusetts will be getting under way with construction. Expect similar efforts in other regions of the state by the regional incumbents.
In the end, all three of the New York projects will chug ahead and will be far along as 2015 comes to a close and will be on target for opening in the first half of 2017. Logic and the private sector realities should win out on the issue of the state revisiting its decision to make three instead of four license recommendations in the upstate region, since a recommendation for the award of a fourth license could unravel what had been to date an efficient regulatory process and would create market uncertainty.
The New York racing and breeding scene will be highlighted by the scheduled April release of a statutorily mandated report by the New York Racing Association (NYRA) Reorganization Board of Directors, which will recommend next steps in the future operation of the NYRA franchise. On the heels of its November 2014 report that it is in the black and financially solvent, there will emerge a push to reprivatize NYRA and this issue will be front and center with the Reorganization Board scheduled to sunset in October 2015. This issue will evolve and may lead to the State Legislature and the governor tweaking the structure of the NYRA Board in terms of number of seats, duties and responsibilities in an effort to exert even more governmental control over the franchise. All of this in advance of the possible expansion of casinos in the New York City metropolitan market in the coming years. Prominent race track operators from outside of New York will appear on the scene to evaluate the landscape and position themselves for the possibility of the state selling off the NYRA franchise. Horsemen will wring their hands on the impact of all of this on winter racing at Aqueduct, but with no voting seats on the NYRA board will be left on the outside looking in, crossing both fingers and toes. New York thoroughbred breeders will be equally concerned about the developments. After a year of expanded breeding and sale of New York-bred weanlings and yearlings in the marketplace they will be watching these developments closely. The seeds for watershed change in New York racing and breeding for years to come could very well be planted in 2015.
Our boldest prediction for 2015 is that on June 6 at the Belmont Stakes, for the first time since Affirmed in 1978, the world will celebrate a Triple Crown winner. This equine athlete will take the nation by storm and the name of the Triple Crown winner is ______________. Hey, c’mon, we’re bold, but we’re not that bold.
Cheers for a great 2015. Enjoy.