Top-tier casino operators won’t be interested in bidding for one of the four licenses to operate a casino in upstate New York, according to gambling experts who attended a casino forum Wednesday in Saratoga Springs.
The majority view during Albany Law School’s annual Saratoga Institute on Racing and Gaming Law conference was that high tax rates and a lack of population centers would keep away top-of-the-line Las Vegas operators and almost ensure that racino operators vying to become full-fledged casinos would be successful. Under a plan from Gov. Andrew Cuomo, if voters this fall approve a referendum allowing seven non-Indian live-table casinos, the state would initially allow four upstate casinos, at least one each in the Capital Region, Southern Tier and Catskills.
Richard Baldwin, managing director of Union Gaming Analytics, which is based in Las Vegas and does economic feasibility studies, including some for New York racinos, said only “tier two” casino operators are considering developing a casino in the three outlined regions. He said most large operators are interested in developing a casino only in New York City, which will be off-limits to casino development for about seven years under Cuomo’s plan.
He added that the proposed tax rates, which would be 10 percent for live-table games and 37 to 45 percent for slots, would be significantly higher than what operators pay elsewhere. Baldwin called the tax rates punitive and said they would limit the size and scope of proposed projects.
“I think the interest is muted to a large degree outside the New York City metro area,” he said.
This sentiment was echoed by Patrick Brown, a former aide to then-Gov. Mario Cuomo and now a major lobbyist. He said Las Vegas casino interests analyzing the prospects of an upstate casino would likely not see the possibility of the return they typically expect on their investment.
Brown added that some operators have a lot of capital and can afford to take risks, like a gamble that upstate could host a thriving casino. He noted that Genting, which operates all over the world and runs the state’s largest racino in Queens, is the only major casino operator that has expressed an interest in any of the four upstate casino licenses. Genting has proposed developing a live-table casino in the Catskills.
Part of the decrease in interest is due to the surrounding competition. Brown noted that New Jersey, Pennsylvania and Connecticut all have their own casinos, and Massachusetts will shortly. Also, Indian-operated casinos have been open for years in upstate New York, as have racinos at various harness racing tracks.
State Sen. John Bonacic, a Republican who represents the Catskills, had a slightly more optimistic view, saying that MGM, Foxwoods and Caesars have all expressed interest in developing a casino in the Catskills. But he added, “I’m not saying they’re all going to make a bid for a license.”
Even without top-of-the-line bidders, Baldwin was still optimistic about the chances of the four casinos being successful, just on a smaller scale than what could be possible with either a closer proximity to a large population center or lower tax rates.
As for the potential increase in tax revenue for the state from four live-table casinos in upstate, E.J. McMahon, a senior fellow at the fiscal watchdog the Empire Center, estimated that it would just be a drop in the bucket in the state’s overall budget. He predicted an annual increase of about $150 million, which is barely more than 0.1 percent of the state’s spending this year.
The benefit of tax revenues, he said, would likely be more significant to communities near the casinos. Though the state would get 80 percent of the tax revenue, the remaining 20 percent would represent a more significant sum of money to the much-smaller county budgets.