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State planning comprehensive gaming market study

State planning comprehensive gaming market study

Gaming landscape has changed dramatically, with more competition from other states
State planning comprehensive gaming market study
The entrance to Rivers Casino & Resort in Schenectady is shown.
Photographer: Marc Schultz / Gazette Photographer

SCHENECTADY -- Is there room for more casinos in New York state? Will adding more gambling establishments cause continued harm to places such as Saratoga Casino Hotel, which has lost market share since full casinos began opening upstate in 2017?

Those sorts of water-cooler questions could get professional study and maybe even concrete answers by early next year, under a study proposal being considered by the state Gaming Commission.

In late June, the Gaming Commission issued a request for proposals for one or more consultants to conduct the study, to examine, in particular, the potential impact of adding three new casinos in the New York City area. The request for proposals was first reported Monday by the Times Union.

The study would also consider the competitive impact of newly legalized gambling in neighboring states, including Massachusetts and Pennsylvania.

The availability of legal gaming in New York state has expanded dramatically in the last 15 years, especially since voters in 2013 approved a state constitutional amendment allowing four full-gaming casinos in four corners of upstate.

The casino industry continues to expand: Rivers Casino & Resort in Schenectady on Tuesday morning will open its new in-person sports betting facility, with a variety of officials expected to be present.

"The commission seeks a qualified vendor to provide an analysis of the current gaming market including the impact of the (2013 legalization) act and the economic and revenue impacts of the potential award of an additional three commercial gaming facilities in downstate New York," the RFP states.

Assemblyman Angelo Santabarbara, D-Rotterdam, a member of the Assembly Racing and Wagering Committee, said he is concerned that the study not become a pretext to expand gambling access in New York City to the detriment of upstate casinos.

"Basically, the gaming commission went out on their own here," Santabarbara said. "I think very few people are even aware this is happening. I'm concerned if this is going to be used as justification for increasing the number of casinos downstate...Rivers is doing very well, and I don't want to see anything endanger that."

Casino gambling was a $2.35 billion industry in New York in 2017, according to a 2018 annual report from the American Gaming Association. That revenue figure is now higher, since 2017 was the first year for Rivers Casino & Resort in Schenectady and one other upstate casino, and Resorts World Catskills didn't open until early 2018.

Two-thirds of the 2017 gaming revenue, however, came from downstate: Nearly $1.6 million was generated by Resorts World New York in Queens, Empire City Casino at Yonkers Raceway, and Jake's 58, on Long Island. Those are all video lottery terminal facilities now, though the owners of at least the Queens and Yonkers facilities would like to make them full-gaming casinos.

Allowing full-scale casinos in the New York City area would require a separate voter-approved state constitutional amendment, and the earliest such a referendum could be put before the state's voters would be in the fall of 2021.

Santabarbara said the prospect of New York City casinos was discussed when the 2013 constitutional amendment was being debated, and the amendment presented to voters that year limited the casinos to four upstate regions for a reason. "There were protections put in there (for upstate casinos), and I wouldn't want to see any of those protections go away," he said.

Upstate, the performance of individual facilities has been uneven: The Saratoga Casino Hotel in Saratoga Springs, which has VLT games, has seen a double-digit drop in revenue, due largely to the competition from Rivers, a full-gaming casino less than 25 miles away.

Moody's Investor Services warned in a 2018 report that there was a high risk of the number of casinos in the Northeast reaching a saturation point where casinos start "cannibalizing" each others' revenues. The study will also weigh the impact Native American casinos, which the state only has limited power to regulate, on state-regulated casinos. 

Bidding consultants are asked to have knowledge of lodging, real estate and the tourism industries, as well as the ability to do business, market and economic analysis.

Among topics that must be studied specifically are the impact of downstate legalization on the existing gaming industry, the impact of tax rates on VLT and casino operations and how the downstate economy could be impacted. The consultant will be asked to make recommendations on how to keep the gaming market sustainable and growing, and maximize state revenue.

The Gaming Commission has not held a public discussion of its plans for a comprehensive market study, and commission spokesman Brad Maione said he couldn't comment during a restricted period while the request for proposals is pending.

State officials are moving on an aggressive schedule: Responses to the RFP are due by July 31, with the commission scheduled to make a decision at its Aug. 12 meeting, and work on the study to start by Sept. 1. A draft report is due by Nov. 29, with the final report due by Dec. 31.

The study could put some hard data and analysis to some of the commonly spoken concerns about the industry: That the four upstate casinos, including Rivers Casino & Resort, have so far failed to meet their initial revenue projections; the total economic impact of the industry on the state; and external factors like the legalization in Massachusetts that have changed the regional market.

Correction: This story has been corrected to include the actual RFP due date of July 31.

Reach Gazette reporter Stephen Williams at 518-395-3086, [email protected] or @gazettesteve on Twitter.

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