Batavia Downs Expanding ‘High-Rollers’ Program Following Gaming Commission Inspection

From the Morning Memo:

Batavia Downs and Western Regional Off-Track Betting is doubling down on a “high-rollers” program despite questions raised by media outlets and local lawmakers about the program’s implementation.

Management announced it intends to expand the “Suitestakes” ticket giveaways at their gaming facility. It plans to enter into a three-year agreement with Pegula Sports and Entertainment for a suite at the Buffalo Bills football stadium. It just finished the first year of a three-year suite contract at the Key Bank Center in Buffalo, as well.

“Our Suitestakes program has and continues to help us achieve record results,” Marketing Director Ryan Haseneur said. “We will be expanding the number of times and methods with which we distribute the tickets to ensure future success.  Revenues from the facility are distributed to the shareholders of Western OTB including the 15 Western and Central New York counties and 2 cities of Buffalo and Rochester.  Our success means more money is given to those municipalities.”

The program is intended to be a perk for customers who regularly spend money at the racino facility, however former state Senator George Maziarz suggested earlier this year the tickets were actually being given to friends and family of board members and management. Several news outlets, as well as Niagara County lawmakers, have requested access to the “high-rollers” list but OTB has denied, arguing its customers have a right to privacy.

OTB leaders have vehemently defended the program though, noting it has been in place since 2014 and recently received a prestigious casino marketing award. It said, despite withholding the names from the general public, invite the NYS Gaming Commission to review the allegations, and two inspectors accepted the invitation.

“Following this review, the inspectors advised WROTB that they were pleased with our cooperation and fully satisfied that the records they reviewed and the interviews they conducted did not raise any issues of concern for the Gaming Commission,” President Henry Wojtaszek said.

The board plans to consider the resolution to enter into the agreement at the Bills’ stadium at its meeting this month.

Seneca Casinos Preparing To Start Sports Betting

The Seneca Nation of Indians said Monday it is preparing to bring sports betting in its casinos, although the timeline isn’t clear yet.

Last week, the New York Gaming Commission approved rules and regulations for licensing, owning and operating sports gaming facilities. The rules apply only to the four Upstate casinos and Native American facilities and wagers must be placed in person.

The U.S. Supreme Court struck down a ban on sports betting last year, effectively opening up the industry outside of the state of Nevada. However, while the move does not come as a big surprise, the Senecas had remained relatively quiet about their plans, waiting for New York State to work out its regulatory structure.

“Now that regulations for in-person sports betting have been approved in New York, the Seneca Nation will move forward accordingly with our preparations to offer this new and exciting amenity to our casino guests. As we always have, we will ensure that our operations offer our guests the best atmosphere and experience available anywhere in the region,” spokesperson Phil Pantano said.

The state Legislature is still weighing expanding the industry to allow online and mobile betting, as well as wagers at off-track betting and race track facilities. The governor has repeatedly voiced skepticism about whether a deal can get done this year and questioned the constitutionality of the bill.

A source said the legislation still appears to have some life though in the final days of session. The Senecas, who could potentially have some exclusivity rights in their region, said they are in favor.

“While we make these preparations, we will also continue to monitor discussions surrounding the potential for mobile sports wagering in New York, which we feel will elevate the guest experience and excitement even further,” Pantano said.

The Senecas own and operate gaming facilities in Niagara Falls, Buffalo and Salamanca. Otherwise, as the law currently stands, del Lago in the Finger Lakes would be the closest casino where someone from Western New York could place a wager in person.

Business Council Makes Pitch For Downstate Casinos

The Business Council in a letter released Monday called for the expansion of casinos in the New York City area, a move it said it could generate as much as $1.5 billion in licensing fees.

The letter from Business Council President Heather Briccetti also called for the rejection of converting existing racinos — such as those operating at MGM’s Empire City in Yonkers and by Genting at Aqueduct in Queens.

“The State should reject any quick-fix approach to convert existing racinos to full-fledged gaming operations,” she wrote in the letter obtained by Capital Tonight. “That error would deprive New Yorkers of the full revenue and jobs potential open competition brings to the table.”

Both companies have been pushing lawmakers to accelerate the time frame for downstate casino licenses to be issued. Upstate commercial casinos currently have an exclusivity in the state that runs until 2023.

Excluding existing racino operations would benefit the Las Vegas-based Sands, which has been eyeing an entrance into the New York market. The company, led by prominent Republican donor Sheldon Adelson, this year formed an advisory group with prominent New Yorkers, including former Gov. David Paterson.

At the same time, the Business Council an “open and transparent” process in issuing three licenses for the New York City area.

“Without full gaming downstate we’re conceding new revenue and New York dollars to surrounding states who seized on the economic opportunity,” she wrote in the letter.

“New York City is by far the most attractive new market in the country for the gaming industry. To fully maximize this unparalleled economic development and revenue opportunity, we need all companies interested to compete and put their best plans forward for a valuable license to build and operate gaming resort destinations in our State.”

The expansion of casino gambling in New York to commercial operators was initially sold as an effort to aid the upstate economy.

Gov. Andrew Cuomo’s top budget director last week cast doubt on whether the timetable for downstate licenses would be sped up as well as the revenue benefit the move would generate.

Las Vegas Sands Advisory Board Takes Shape

An advisory board for the Las Vegas Sands casino to be led by former Gov. David Paterson is taking shape as the casino begins to consider the expansion of table-top gaming in the New York City area.

The advisory group will include a cross-section of clergy, business leaders and civil rights leaders:

-Jim Heyliger, President, Association of Minority Enterprises of New York (AMENY)
-Bishop Troy DeCohane, President, United Black Clergy
-Reverend Phil Craig, Chairman, Greater Springfield Community Development Corp
-Reverend Johnnie Greene, President, MPAC
-Hazel Dukes, President, NAACP New York State Conference
-Mark O’Luck, CEO, Spectrum Personal Communications Corp
-Reverend Clinton Miller, Brooklyn Brown Memorial Baptist
-Dr. Carl L. Washington, Jr., President, Empire Baptist Missionary State Convention

The board is being formed with an eye toward jobs for minority and women own business community.

“With the expansion of gaming downstate, New York is facing a once in a lifetime jobs and economic development opportunity with tens of thousands of local accessible jobs, MWBE business opportunities and training programs for an at-risk workforce,” Paterson said in a statement. “To deliver the most revenue possible for New Yorkers, with no subsidies or tax credits, we need a competitive process to bring billions of dollars in immediate and sustainable revenue streams to the State to fund programmatic and policy priorities including public education, public transit modernization or affordable housing.”

It’s a key outreach for Sands in the New York market, whose CEO Sheldon Adelson is a prominent Republican donor.

Moody’s Paints Negative Financial Picture For Del Lago Casino

Moody’s Investor Services has downgraded ratings for Del Lago Casino in the Finger Lakes region for the second straight year.

Moody’s said Del Lago’s ramp up in terms of gross gaming revenue remains well below expectation. It does not believe the casino will generate enough money to cover its financial obligations over the next 12-18 months.

“As a result, without further equity investment of some type — the company contributed about $11 million of cash equity earlier this as part of a covenant amendment — Moody’s is of the opinion that Lago will require a restructuring that involves some level of impairment,” Moody’s Senior Vice President Keith Foley said.

The company said the casino’s key credit challenges include the slower than expected ramp up and the highly competitive nature of the market. Moody’s pointed to Oneida-run Turning Stone Casino, about 75 miles to the east, as well as Seneca facilities to the west as direct competitors.

The tribal facilities have a more favorable tax regime than del Lago. There are also four “racinos” within 100 miles, dipping into the market share.

“The downgrade and the negative outlook consider that despite a slight pickup in Lago’s monthly gaming revenue, this improvement is not enough to alleviate Moody’s concern that Lago will be challenged to support its annual fixed charges of about $50 million going forward,” Foley said.

During the final days of state budget negotiations last year, the casino asked legislative leaders and the governor’s office for assistance, potentially in the form of a lower tax rate. Many lawmakers pushed back on the idea of a “bailout” and it was not included in the budget.

Del Lago officially opened in Feburary 2017.

Bonacic: Del Lago Assistance Not Part Of Budget

State assistance for the struggling del Lago Casino in the Finger Lakes region may not be out of the question, but State Senator John Bonacic said it will not be part of this year’s budget bill. The downstate Republican said the topic is dead for now but he would like to see something done in the remaining months of session.

In the past few days, many members of his conference as well as the governor have railed against the request from del Lago, referring to it as a bailout. Bonacic said he sees it differently.

“It’s all their money to start with, so what are you doing? You’re just, the government is not getting as much of their money as they put in but I don’t see it as taxpayer money at all,” he said.

The casino has argued it did not reach revenue projections in its first year of operation, largely because competing Seneca Nation-run facilities were no longer paying the state and were using the extra money to lure customers. Del Lago pays 37.5 percent of its slot revenue and ten percent of its tables under the current agreement with the state.

It has not said exactly how much assistance it is asking from New York. State Senator Michael Ranzenhofer said he understood it to be a roughly $14 million tax break while Bonacic said the casino is asking for a ten percent market allowance.

Cuomo Not Interested In ‘Bailing Out’ Casinos

Gov. Andrew Cuomo told reporters at the Capitol he’s not interested in “bailing out” financially struggling upstate gaming casinos. This comes in response to a request to the state from del Lago Casino in the Finger Lakes for assistance.

The casino said it wasn’t able to meet projections in its first year of operation because of an uneven playing field which didn’t exist when it won its gaming license. Specifically, it pointed out Seneca Nation-operated facilities, which is not currently paying the state while a dispute is arbitrated, are using the windfall to lure customers away from del Lago.

The governor doesn’t appear to be buying the argument,.

“The upstate gaming casinos are private concerns. They bid. They made an investment and some of them will say they’re not doing as well as they hoped or would’ve expected but they’re private concerns,” Cuomo said.

He said the state has allowed new casinos gaming facilities to generate economic development and create jobs which it has done.

“These facilities have done billions of dollars of construction and they employ thousands of people so to the extent you have a casino saying, well you know what, I don’t think my expectations, I’m not meeting my expectations, I should get help from the state, I’m not sympathetic to that,” he said.

Many Upstate Republicans in the state Senate have been vocal in their opposition to a bailout as well, including Senator Joe Griffo, R-Rome, and Mike Ranzenhofer, R-Amherst, both of whom penned letters to Cuomo about their concerns.


Ranzenhofer Letter to Governor Cuomo by Ryan Whalen on Scribd

Moody’s Has Tough Outlook for New York Casinos

The market for the casino industry is a challenging one for the northeast, according to a report released Monday by Moody’s.

The analysis by the rating agency’s gaming analyst Keith Foley found casinos del Lago in the Finger Lakes region and the Rivers Casino in Schenectady took a chunk of gaming revenue from its closet competitors, Finger Lakes Gaming and Vernon Downs, as well as Saratoga Springs.

“This trend, where newcomers are stealing share from incumbents, is consistent with what has been occurring throughout US gaming markets, particularly in the Northeastern portion of the US,” the report found. “We expect this to continue in eastern part of upstate New York, where another large casino, Resorts World Catskills, is scheduled to open this March.

The challengers go further than that, too, as the revenue from casinos has been lower than initially projected.

“The opening of two new large casinos in upstate New York – del Lago Resort Casino and Rivers Casino Schenectady – have helped grow state monthly gaming revenues by about 30%. However, while del Lago Resort Casino has substantially grown total gaming revenues generated in its primary market area, the property’s revenue ramp-up so far has been well below our expectations,” Foley said.

“The success of Resorts World also relies on the growing gaming market and attracting players from existing competitors. However, unlike del Lago and Rivers, Resorts World is located within reasonable driving distance from the densely populated New York metro area and has the downstate portion of New York as one of its primary market areas. That said, like del Lago, we expect Resorts World will be entering a very tough gaming market.”

The legalization of table-top casino gambling in New York was approved by voters in 2015 through a constitutional referendum, which Gov. Andrew Cuomo framed as an economic development push for upstate communities.

But the casinos have struggled with revenue amid a challenging northeast market, a trend gaming analysts had expected to see revisited in New York.

Vernon Downs Postpones Opening Day Citing Casino Competition

Vernon Downs has postponed its April 21 opening day for harness racing, pointing to increased competition from three casinos in the region.

At the same time, American Racing and Entertainment Chairman Jeff Gural in a statement on Thursday called on the state to give the racetrack a tax break in order to shore up its finances due to the lost revenue.

“A tax break for Vernon Downs would not cost the taxpayers any money as taxes from gaming revenue lost from Vernon are currently being generated at our four main competitors in the region. Worse yet, including the horsemen, Vernon has the highest tax rate of its competitors,” Gural said.

“Lowering the tax rate is a way that New York can ensure that properties like Vernon Downs that do not have table games can remain competitive and continue to be an asset within the community. Since reopening Vernon as a racino in 2006 we have given almost $150 million to the State for education. My hope is that New York State will step to the plate to save the three hundred jobs of those that Vernon Downs currently employs in addition to all the jobs and benefits related to racing.”

Vernon Downs, Gural said, has lost an average of $150,000 a month since November. Three table-top gaming casinos have opened within driving distance of the track: Yellow Brick Road, operated by the Oneida Indian Nation, and the commerically run Lago and Rivers casinos.

Gural has been an outspoken businessman and successfully sought a fourth casino license after project proposals for the Southern Tier region failed to win approval from state gaming regulators.

Gaming Commission Approves Casino For Tioga Downs

As expected, state gaming regulators on Tuesday approved a casino license for the Tioga Downs Casino in the town of Nichols — adding a fourth casino to upstate New York.

The vote at the state Gaming Commission in Saratoga Springs was unanimous.

Initially, state officials in late 2014 would only issue three casino licenses for regions north of New York City in Schenectady, the Finger Lakes town of Tyre and in Kiamesha Lake in the Catskills. At the time, the state’s casino siting board questioned the financial viability in a fourth region that would have qualified for a casino: the economically troubled Southern Tier.

But the Southern Tier region the same day of the casino announcement was also shut out from another revenue source, high-volume hydrofracking, which Gov. Andrew Cuomo’s administration moved to ban.

At the urging of state lawmakers and from Tioga Downs itself, Cuomo called for a new casino siting and licensing process for the Southern Tier. The sole applicant was Tioga Downs.

The Gaming Commission touted the economic benefits of bringing table-top gaming to the Southern Tier, including $25.6 million in statewide school aid as well as $3.2 million for Tioga County and the Nichols town government.

“Tioga Downs’ expansion will foster hundreds of new jobs and spur much-needed economic development in the Southern Tier, plus generate millions of dollars for public schools and local governments – with all private money and zero taxpayer dollars,” Commission Executive Director Robert Williams said in a statement.