While details are still sketchy at press time, the massive state deficit that has been estimated between $8 billion and $15 billion, may be the cause for the st

While details are still sketchy at press time, the massive state deficit that has been estimated between $8 billion and $15 billion may be the cause for the state to begin the process of awarding up to three casino gaming licenses in Downstate New York earlier than originally planned.

Gov. Andrew Cuomo in his State of the State address reported that he intends to issue a Request for Information for interested parties in securing up to three of the remaining casino gaming licenses in Downstate New York (New York City metro region) to be granted by New York State.

While further details were not released, the New York State Gaming Commission noted that the proposal, if part of the state budget, would have to be approved by the State Legislature by the end of the fiscal year (March 31, 2021). While the Gaming Commission offered no further information or a timeline on when those licenses might be approved, it did release a study on Monday Jan. 27 undertaken by Spectrum Gaming Group, on the impact of downstate casino gaming and mobile sports betting on the state’s economy and the potential windfall in revenues the new facilities could bring to state government. The governor has also proposed the legalization of mobile sports betting as a revenue source to help offset the impact of the coronavirus in the 2022 state budget, as well as the legalization of recreational marijuana.

The addition of up to three casino gaming facilities in the New York City metro region that might include: Empire City Casino in Yonkers, Resorts World New York at Aqueduct Raceway in Queens—both operating as Video Lottery Terminal (VLT) facilities—and perhaps at the new Belmont complex in Nassau County or at a site to be developed in Manhattan, would definitely impact customer traffic at Resorts World Catskills in Sullivan County and at other existing upstate casinos. If the downstate initiative does move forward, the state would be beginning the process early, since the state’s gaming law bans the award of downstate casino licenses until 2023. The measure was intended to allow the upstate casinos to establish a client base before they faced competition from downstate facilities.

If downstate casinos move forward ahead of plan, the economic impact on the New York City and surrounding markets would be significant. For Westchester County, if MGM Resorts’ Empire City Casino is granted one of the available full gaming licenses, the City of Yonkers and Westchester County would definitely benefit from the expansion at the storied complex along the New York State Thruway that would include new construction and permanent jobs and significant investment in the expansion that could include new hotel and conference center space.

Gaming interests have been lobbying state lawmakers for some time to move the clock forward on downstate gaming. The Business Council of Westchester has been advocating for a full casino license to be issued to Empire City Casino. John Ravitz, executive vice president and chief operating officer of The Business Council of Westchester, said the full casino license at Empire City, along with approval for Empire City to manage mobile sports betting, will be among the top items on the Rye Brook, NY-based organization’s legislative agenda for this session of the State Legislature.

An Empire City Casino spokesman in a prepared statement in connection with the potential downstate casino RFI release, stated, “Empire City Casino was the largest private employer in Yonkers before the pandemic, and like many businesses, we’ve been hit hard during COVID-19. A full-scale casino license, with mobile sports betting and live dealers, would significantly speed up recovery, help us hire back employees and put more local residents back to work. It would also generate significant and immediate new revenue for the state through license fees and put revenue back into the local economies, especially Yonkers, Bronx, and Mount Vernon, where most of our employees live.”

The impact of new downstate licensed gaming awards on existing upstate gaming facilities could prove troublesome to operations already under stress due to COVID-19.

Resorts World Catskills casino in Monticello opened its doors for the first time to customers on Feb. 8, 2018.

A spokesman for Resorts World Catskills said in connection with the governor’s announcement and Gaming Commission study of downstate casinos, “Since reopening in September, we have begun implementing the marketing and growth strategies to fulfill the untapped potential of Resorts World Catskills. On a parallel track, we will continue to work with our local and state partners on a variety of issues including protecting the good-paying union jobs that are critical during this period of severe unemployment.”

Resorts World Catskills in June 2019 agreed to build a VLT facility (similar to existing facilities at Empire City Casino in Yonkers and at Resorts World New York in Queens) in Orange County to lure more downstate customers to their operations.

In June 2019, New York State Senator James Skoufis announced that his legislation to establish a VLT facility in Orange County had received a three-way agreement between the Senate, Assembly and Gov. Andrew Cuomo. The VLT license, owned by Resorts World, will be transferred from its closed Monticello operation to the new site in Orange County if developed.

In reaction to the latest gaming news, Resorts World Catskills says it is continuing to work on the planning for the Orange County project.

A spokesman for Resorts World Catskills stated, “Since 2019, after New York State approved a plan for a video gaming machine facility in Orange County, we have conducted a series of site analyses in the area and that due diligence is ongoing. We look forward to continuing to work with the community as we formulate a plan to bring good-paying jobs to the region and to generate additional revenue for New York’s public schools.”

Among some of the highlights of the Spectrum Gaming Group’s report on downstate gaming and mobile sports betting include:

• Downstate counties show the greatest potential for growth in Gross Gaming Revenue, ranging from $970 million to $4.49 billion for New York City, and $606 million to $1.13 billion for Long Island. The potential of the New York City market could be captured by the addition of new gaming facilities. The potential of the Metro-North region may be realized by the addition of an already-approved Orange County video lottery gaming facility, as well as through expansion of gaming further Downstate. Spectrum indicates that such expansion might have negative impacts on existing gaming facilities.

• In light of the economic fallout from COVID-19, the State of New York could opt to delay, for an undetermined period, the decision to authorize the three commercial casinos in the Downstate region, the report stated.

• Spectrum recommended that a competitive bid process be utilized to arrive at the most optimal result for the state based upon a review of the economic, fiscal, and social implications of the awarding of up to three additional commercial casino licenses.

• Job growth in the gaming sector from 2015-2020 has been significant, as total employment at casinos and video-lottery gaming facilities grew from 12,000 jobs in 2015 to 15,700 jobs in 2020, of which roughly 3,400 are at the four commercial casinos that make up the Upstate expansion properties. Spectrum estimated that there are 32,000 people employed in the entire sector. While upstate expansion accounted for 17% of total employment, it accounted for 75% of growth from 2015-2000.

• Spectrum’s analysis concludes the state’s gaming industry will slowly recover from the pandemic, returning to pre-COVID-19 levels in 2023.

• With respect to mobile sports betting, Spectrum indicated that stabilization of revenue will occur three to five years after commencement. The firm’s analysis concluded that at a 10% tax rate, retail and mobile sports wagering would generate between $72 million to $104 million in tax revenue to the state. The proposal advanced by the FY 2022 Executive Budget uses the same gross revenue estimate to generate upwards of $500 million for education. The estimate assumes that the tribal sports wagering operators will not be able to generate meaningful market share.

Commenting on the release of the gaming report, New York State Gaming Commission Spokesman Brad Maione stated, “This report provides a valuable tool for the commission and policy makers to use as discussions continue on the future of the gaming industry in New York. This report should assist with making sound fiscal decisions.”