New York State rushing toward casino decision as deficit looms

New York state is expected to issue three downstate casino licenses in the first half of 2023, with the facilities operating two years after, bringing a financial boon to the state and the winners.

Already, the state has seen more than $500 million of revenue through early November from online gambling, which made its debut early this year, according to State Senator Joseph P. Addabbo, Jr.

Multi-billion-dollar development plans, spanning the five boroughs, were submitted following Gov. Kathy Hochul’s January announcement of an accelerated pace for the development of the downstate casinos, along with four upstate facilities, which were approved by voters on a 2013 ballot.

Hochul earlier this year ordered the Gaming Commission to begin processing applications by the end of this year, instead of the original 2023 deadline, citing the immediate need for capital as the state continues to grapple with budget woes linked to the pandemic and a $310 million deficit expected in fiscal 2023.

Just to submit a proposal costs $1 million, and the state will levy a $500 million licensing fee on the eventual winning developers. More importantly, casino revenues will be taxed at 51%, and officials hope for a repeat of the success seen from online sport betting.

The Gaming Commission in early October appointed a three-member Gambling Location Selection Committee to make a final in the first half of 2023.

Three licenses are available, but it’s widely believed the state already has two frontrunners in mind. While not offering live casino-style table games, existing “racino” facilities at the Aqueduct racetrack in Queens and Empire City in Yonkers, which already operate slot machines and off-track-betting services, have an established gambling infrastructure that gives them a major advantage according to the rating criteria set forth by the state.

That hasn’t stopped New York real estate development heavyweights, the who’s who of the casino industry, and even A-list celebrities from jumping at the opportunity to submit large-scale development plans for locations across the city.

In Manhattan, Hudson Yards developer Related Company partnered with Wynn Resorts to propose a resort-style development on the western portion of that property. The plan calls for a hotel, restaurants, clubs, and even a theater, along with the casino.

Developer SL Green Realty partnered with Caesars Entertainment and Jay-Z’s Roc Nation entertainment company to pitch a plan to redevelop a property at 1515 Broadway in Times Square that would include a Broadway theater. Along with promising to draw seven million visitors annually, the proposal includes adding large digital advertising boards to the building.

Across town on a six-acre site near the United Nations building, the Soloviev Group and an as-yet unnamed Las-Vegas based partner developed plans for a casino that include a 700-foot-high office tower, apartment complex, Ferris wheel and four-acres of green-space.

In Queens, New York Mets owner Steve Cohen is partnering with Hard Rock Cafe for a proposed casino and entertainment venue in Flushing Meadows, Queens, near Citi Field.

The most recent pitch came from developer Joe Sitt of Thor Equities, who partnered with the Chickasaw Nation and New York-based casino operator Saratoga Casino Holding on a plan to build on Coney Island.

Sitt’s plan, like the other leading proposals, relies on experienced gambling industry partners to create a resort-style redevelopment with restaurants, attractions, hotels and a conference center, in addition to the casino.

The Chickasaw Nation of Oklahoma, which operates the largest casino in the world, the WinStar World Casino, and Saratoga Casino Holdings, which runs several large casinos on tribal lands in upstate New York, together would manage all aspects of gambling operations, Thor said in a statement.

“The combined mastery” of the duo along with Thor’s development know-how will help develop a plan, “fulfilling a generations-long promise to Coney Island by providing the region with a permanent, thriving local economic engine,” the statement said.

Thor also promises to heed local needs to ensure “a community-friendly gaming and entertainment venue.”

Even after the state approves a plan, the law requires developers get a green light from a six-member local committee, which will be formed after the state delivers its decision on applications, which is why applications emphasize community development of some sort.

The local committee members will be selected (one each) by the governor, the area’s state senator, the state assembly member, the mayor, the borough president, and the City Council representative. Four yes votes will be needed for approval.

But with the accelerated deadline, local opposition emerged.

Manhattan’s three proposals received most of the publicly voiced heat from local politicians, including Borough President Mark Levine, who in a Tweet called for “iron-clad mechanisms for local stakeholders to provide input and consent.”

“I know that many kinds of gambling are now legal throughout our state but, speaking for myself, I am never excited about the expansion of gambling activities,” said State Senator Liz Krueger, who represents the Times Square area. “They can be addictive, exploit those least able to afford to lose their money, and redirect people’s disposable income away from other activities and toward the owners of the gambling concerns.”

Broadway’s largest theater owner, the Shubert Group, has also come out in opposition, citing the damage a casino would do to the economy and character of the area. Krueger said she’ll oppose any proposal until she sees solid plans.

“I am not commenting on potential casino proposals until I see actual proposals,” the senator said. “As they say, the house always wins.”