Legislators passed a major casino bill late Friday night that gives New York voters a chance to have their say on the subject this fall – but oddly enough if they vote down the measure, the state still has the right to expand gambling anyway. A provision built into the legislation allows the state to add four new video lottery gaming facilities if the voters turn it down. Most of the time the public is given a chance to have a say on gambling, if they say no, it means no. But Gov. Andrew Cuomo is determined to provide economic development and new revenue for education in the state through gaming, one way or another.


In New York, it’s all about the language. Officials are differentiating between casinos, racinos and video lottery parlors. In fact, under the agreements struck with the tribes, the tracks may no longer market themselves as casinos. So technically the machines in use at the racetracks in New York are not slot machines – they are built on a statewide central system. But neither are the machines in use at tracks in several other states, and those facilities are all considered to be casinos. Certainly the customer sees the glitz and glamor of a casino. You know the old saying – if it looks like a duck and it quacks like a duck, then it’s a duck!


The Upstate New York Gaming Economic Development Act (A08101, S05883) calls for four new destination casinos in the Upstate New York area, outside the exclusivity zones of tribal gaming. Three regions are eligible – the Hudson Valley–Catskill area, the Capital District-Saratoga area and the Eastern Southern Tier. One of these regions may have two casinos if market conditions warrant. No further destination casinos will be licensed for a period of seven years after construction begins on the first new casino. While the bill does not authorize any casinos in the greater New York City area, it does allows for up to 1,000 lottery-operated video gaming machines at two locations on Long Island, one each for the Nassau and Suffolk OTB corporations.


A group representing the track casinos – the New York Gaming Association – had been against the new legislation until it was changed in session to equalize the tax rates. The Governor’s proposal had included a lower tax rates for the casinos than for the existing racetrack casinos. Under the bill passed Friday, the new casinos would pay the same 37 to 45 percent of machine revenues that the tracks pay, depending on region. That puts the casino tax rate among the highest in the nation, and is much higher than Cuomo’s original proposal of 25 percent, but it gives the racetracks parity – critical to getting them on board. Table games would be taxed at 10 percent.


It’s a good thing that elected officials recognize the contributions of the racetracks to the state over the years. The facilities have generated more than $8.3 billion in net gaming revenue in the 10 years they have been operating, with almost $4 billion of that going to education. And of course there are numerous other economic contributions the tracks have made – and not just from the marketing and capital improvement funds provided by the video gaming law.


The following table summarizes annual revenue over the years; New York’s fiscal year runs from April 1 to March 31. The number of machines indicates the number at the end of each year.

 

  Net Win To Education # of machines
       
FY04 $21,775,587 $13,283,108 2,813
FY05 231,718,347 141,348,192 5,067
FY06 315,700,503 162,021,558 5,486
FY07 522,668,532 273,489,255 12,187
FY08 875,281,284 480,029,775 12,886
FY09 965,074,375 429,913,540 12,979
FY10 1,037,248,157 463,961,399 12,469
FY11 1,109,562,241 521,339,952 12,524
FY12 1,426,784,157 667,041,170 17,270
FY13 1,825,368,936 831,920,649 17,543
       
Total $8,331,182,119 $3,984,348,598  


[Also over the weekend, voters in Everett, Mass., approved the casino deal with Wynn Resorts – more on that in my next entry.]