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What you need to know for 10/20/2017

2 harness track racinos look to state for relief

2 harness track racinos look to state for relief

'This legislation is all about fairness ... and ensuring a level playing field'
2 harness track racinos look to state for relief
Patrons play at the racino in Saratoga on May 27, 2013.

CAPITOL — Two harness racing tracks that host electronic casino operations are looking to the state for help amid increased competition from the proliferation of casinos across upstate New York.

One piece of legislation would allow Saratoga Casino Hotel in Saratoga Springs to use 4 percent of its net win for capital improvements. 

Another would increase the percentage of the net win retained by Vernon Downs Casino Hotel in Vernon, near Utica. The owner has threatened to shut down if the measure is not approved, and on Wednesday, as a preparatory measure, filed the required state notice that all 345 employees will lose their jobs this autumn.

Both bills have been approved by the state Senate but have been sitting in committee in the state Assembly. The 2017 legislative session is scheduled to end Wenesday.

The bill to benefit the Saratoga Casino Hotel was sponsored in the Senate by Sen. Kathy Marchione, R-Halfmoon, and in the Assembly by Assemblywoman Carrie Woerner, D-Round Lake.

Marchione explained in a news release that racinos classified as “small” -- those with fewer than 1,100 video gambling terminals -- already get to keep 4 percent for capital upgrades but “medium” racinos -- those with 1,100 to 1,900 terminals, such as Saratoga -- do not.

“This legislation is all about fairness for Saratoga and ensuring a level playing field for our community’s video gaming facility to receive further investments that will support the facility, benefit our economy, help create more jobs and generate additional funding for education,” Marchione said in the news release.

BillboardSign_Outlook03_0.jpg
A billboard on Route 9 entering the city of Saratoga Springs advertisers Rivers Casino in late February. (Erica Miller)

Woerner told The Gazette that one reason for the measure is the arrival earlier this year of Rivers Casino & Resort in Schenectady, which has cut into Saratoga Casino Hotel’s revenue.

“With the opening of the Rivers Casino,” she said, “they are definitely seeing an impact on their business, so making it easier for them to start capital projects that will both create new construction jobs but also help make their facility more attractive to patrons supports the long-term health of the business, and I think it’s important to remember that the racino supports both education funding as well as the harness track and the purses for the standardbred horses.”

A spokeswoman for Saratoga Casino Hotel did not return a call seeking comment for this story.

The situation is similar but worse for Vernon Downs Casino Hotel, said owner Jeff Gural. When the harness track added a racino and hotel, it had one competing operation: The Oneida Indian Nation’s Turning Stone in Verona. There are now full-scale non-Indian casinos close enough to offer competition in Schenectady and Waterloo; Turning Stone, just seven miles north; and the Oneidas’ new Yellow Brick Road Casino in Chittenango, 21 miles west. And in April, the Oneidas began construction of Point Place Casino in Bridgeport, 26 miles northwest of Vernon Downs.

Yellow Brick Road and Point Place were the Oneidas' angry response to the state’s allowing del Lago to open so close to Turning Stone, Gural said. “As a result, Vernon Downs is like an innocent bystander in this tumult,” he added. 

“Before this, we only had to deal with Turning Stone. We were able to compete with Turning Stone, we are not able to compete with all four of them.”

Under the legislation approved by the Senate, Vernon Downs would get to keep a larger percentage of net revenue from gambling done on site, and pay less to the state.

Gural called it a reasonable investment by the state for an operation that employs more than 300 people in an area where jobs are not plentiful; pays $2 million a year in various local taxes; contributes $8 million to $10 million annually to education funding; and creates a positive ripple in the area economy, especially from the horses and horsemen during harness-racing season.

The problem, he added, is that the taxation for the state’s racinos was established by agreement under circumstances that have since changed. “I was actually party to it,” said Gural, who also owns the Tioga Downs harness track in Nichols and the full-scale casino there, which was converted from a racino last year.

Under that formula, racinos in wealthier and/or more populous areas were taxed at a higher rate, as they were likely to be more lucrative operations, he explained, while those near existing Indian casinos and/or less-wealthy areas were taxed at a lower rate. With all the new competition, Vernon Downs is less lucrative now, he said.

Finger Lakes Gaming & Racetrack, near Canandaigua, which also was struggling, received a tax break from the state in 2016.

Published reports indicate some speculation among the horsemen that Vernon Downs won’t actually close, that the planned shutdown is a bit of brinksmanship by Gural.

Gural hopes they’re right.

“I would really be shocked if this wasn’t resolved next week, but anything can happen,” he said. “I lose about $5,000 a day, so I figured I might as well start the process of closing.”

The circa-1953 track was closed for two years in the mid-2000s, reopening in 2006 after reaching an agreement with its horsemen and being approved for a state racino license.

Vernon Downs’ layoff notice to the state indicates the casino would close Sept. 10, the race track Nov. 11, and the hotel Dec. 18. One or more on-site eateries would close on each of those dates, as well, and the last of the 345 employees would be gone Dec. 18.

But at this point, the notice is intended only as preparation for a potential shutdown, not as the first step in an actual shutdown.

“I’m highly optimistic,” Gural said.

Gazette reporter Ned Campbell contributed to this story.

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