Analyzing New York State’s Complex Casinos Laws: Is Manhattan Getting One Next?

The date for deciding up to three NYC-area casino locations is drawing nearer
times square empty streets

In the fast-paced world of U.S. gambling expansion, the Upstate New York Gaming Economic Development Act of 2013 seems like ancient history.

But the act, which became law after passage of a statewide referendum that year, did more than just pave the way for the opening of four upstate commercial casinos in the state in 2016-18. Also tucked into the act — beyond the fact that sports betting would be permitted at those casinos if and when a comprehensive federal ban on such wagering was ever removed — was the option for up to three casinos in the New York City region.

But, mindful of the need for the upstate casinos to get a “head start” before the latter casinos opened their doors, no license could be issued downstate until seven full years after the issuance of the first upstate license.

That happened in December 2015, when the Rivers, del Lago, and Catskills casinos received licenses. So what once seemed like a faraway option now can come true by the end of next year.

Casinos — location, location, location

The moratorium on casino licenses was not only for New York City, but also its suburbs of Westchester, Rockland, and Putnam counties, as well as Long Island.

Somewhat curiously, another suburban area of the Big Apple — Orange County — was excluded from the ban.

That led Malaysian gaming giant Genting to propose a $1.5 billion casino fewer than 50 miles northwest of New York City, at the edge of Sterling Forest State Park near the New Jersey border. Caesars countered with a nearby $880 million casino plan near the Woodbury Common Premium Outlets, a hugely popular destination for Asian tourists staying in Manhattan.

Those casino proposals presented a dilemma for state officials.

On the one hand, they clearly presented the best opportunity to maximize “economic activity,” which was supposed to be the main criteria for selection by the state gaming commission. Foreign tourism dollars, as well as dollars from North Jersey — whose residents would be closer to either casino than any in Atlantic City or eastern Pennsylvania — would be a financial windfall for the state.

On the other hand, many backers of the referendum intended for the casinos to go instead to economically depressed areas of the state such as the Catskills, the Schenectady area, or the state’s Southern Tier.

The latter reasoning won out — with mixed results. According to a November 2020 report by state Comptroller Thomas DiNapoli, “Supporters of casinos argued they would provide new revenues to the state and a significant boost to upstate regions that have struggled economically. Actual revenues, however, have been about two-thirds of projected levels and, thus far, economic benefits appear to be modest.”

According to the report, Resorts World Casino in the Catskills, almost 100 miles north of Times Square, has barely produced half of the annual tax revenue projected for the site. That figure likely will decline even further once New York City-area casinos are built, offering locals a more convenient gambling location.

Developers already eyeing NYC casino licenses

New York City mayoral candidate Andrew Yang made some headlines last week with a bold trial balloon floated for a casino in New York Harbor at Governor’s Island, saying, “That casino would generate so much money it would be bananas.”

But a 20-year-old federal deed restriction on such a project and plans for a “mixed-use campus” project on the available land on the island make the prospect of a casino there extremely unlikely.

What about Manhattan itself? According to a New York Times report, two potential casino sites in the midtown Manhattan Herald Square area are making the political rounds — including one by Resorts Atlantic City casino operator and real estate mogul Morris Bailey, a key donor to a campaign in 2016 in New Jersey that helped voters there reject a referendum that might have brought a casino to the Meadowlands, only a dozen or so miles from that site.

Another casino proposal being floated is in Times Square. The ideas no doubt are in part related to a more than 50% drop in real estate space leasing in 2020 due to the pandemic.

But is a Manhattan casino realistic? Assemblyman Gary Pretlow told the Times that “Manhattan is off the map” in terms of casino options.

Meadowlands Racetrack operator Jeff Gural, a major player in New York City real estate circles, has said that the city’s powerful hotel lobby would fight the idea of such a casino.

But on Tuesday, Gural added a caveat to US Bets of “unless the fact that the area has been devastated by the virus has changed things for the theaters and hotels and restaurants who previously opposed it.”

But powerful New York State Senate Finance Committee Chairwoman Liz Krueger, who is from Manhattan, has repeatedly expressed her disdain for construction of any casinos. That sentiment is shared by some borough elected officials as well.

If not Manhattan, then?

Pretlow, the leading proponent of legal gambling expansion in the Assembly, and state Senator Joseph Addabbo Jr., his counterpart in that chamber, for years have had their own favorite sites in mind.

Pretlow represents Yonkers, including Yonkers Raceway and its adjacent Empire City slots parlor. Addabbo represents a section of Queens that includes Aqueduct Raceway and its adjoining Resorts World slots parlor.

Both men have expressed a belief that the respective owners — MGM Resorts at Yonkers and Genting at Aqueduct — of those “racinos,” which do not have live-dealer table games or sports betting, each would pay a licensing fee of $500 million or more.

That is music to the ears of many state lawmakers who are facing a multi-billion-dollar budget deficit. But Gov. Andrew Cuomo so far has turned back any notions of amending state law to speed up the New York City-area casino licensing process.

Still, Cuomo’s formal budget proposal last week includes a sentence that “authorizes the Gaming Commission to issue a request for information for the purpose of soliciting interest regarding the three unawarded gaming facility licenses authorized by the State Constitution.”

In other words, let the games begin.

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