The first passage of a constitutional amendment to legalize casino gambling in New York came fairly easily last year, with the Legislature agreeing on vague language that capped the number of casinos at seven and with relatively few lawmakers voting no. This year Gov. Andrew Cuomo is at odds with legislators over whether to initially include casinos in the downstate region and who will get to decide where the casinos go, making the second passage appear more difficult.
The statewide referendum that would be on the ballot this fall could be an even taller hurdle if the constitutional amendment passes in the Legislature. The governor and lawmakers have plenty of incentive to reach a deal to generate revenue for the state and potentially boost economic development. But if legalization does go to a public referendum, as it must in order to become law, some casino interests will have plenty of incentive to kill the amendment.
Experts anticipate that a ballot referendum, which already has divided support in public polls, will draw heavy opposition spending by groups who stand to lose money if casinos are legalized in New York. The details of the siting process are still vague enough to keep some major casino companies from weighing in on the plan, especially since there is still a possibility of their eventually being able to compete for a casino in New York City.
Other casino interests are more likely to push back. Two major Native American casinos in Connecticut, the massive Mohegan Sun Casino and the Mashantucket Pequot Tribe’s Foxwoods Resorts Casino, have seen their revenues drop in recent years. Both are within a three hour drive of New York City, and would undoubtedly see their profits decline even further if casinos are legalized in New York.
Atlantic City’s casinos have been struggling for years as other states in the region, like Pennsylvania and Massachusetts, have permitted gambling. Just last week the $2.4 bil-lion Revel resort, which was touted as a savior for the casino industry in Atlantic City, announced it will file for Chapter 11 bankruptcy.
James Featherstonhaugh, the president of the New York Gaming Association, said that whatever plan is ultimately agreed upon is “guaranteed to be opposed by a considerable number of powerful gaming forces.”
“I cannot conceive of a plan that would not be opposed by the Connecticut casinos, by the Atlantic City casinos, and there’s a high likelihood at least some of New York’s Native American casinos, and potentially all of them depending on what a final plan looks like,” said Featherstonhaugh. “Collectively, I don’t think there’s any question that whatever plan is laid out, [it] is likely to be opposed by groups capable of spending $25 to $50 million in opposition to it. So I think that passage of the referendum is 50-50 at best. And people think I’m a cockeyed optimist.”
One big question mark is the Seneca Nation of Indians. The Senecas were granted an exclusivity zone for casinos in Western New York in a 2002 gaming compact, but the tribe stopped making its required payments to the state when racetrack casinos in the region were allowed to run slot machines. The matter is in arbitration, and the Senecas are under a gag order.
This year Cuomo initially indicated that his upstate casino plan would respect the exclusivity zone in Western New York. Seneca President Barry Snyder said that the nation appreciated “the governor’s continued commitment to the economic revitalization of Western New York and recognizing the Seneca Nation’s gaming enterprises as an important component for continuing the region’s growth and transformation.”
A few weeks later, however, a Cuomo administration source said that a casino could be located in the Niagara Falls area, which is in the Senecas’ exclusivity zone. If that threat stands, or if arbitration fails to result in an acceptable compromise, the Senecas could end up being one of the leading opponents of a referendum. The tribe, which has withheld more than $500 mil-
lion in payments to the state, also has a pool of cash on hand to fund a campaign against the ballot referendum.
Some of the biggest casino companies, like Las Vegas Sands and MGM Resorts International and even some Atlantic City interests, may wait until New York City becomes an option to get involved and stay out of the fight entirely. But while the governor could benefit by keeping some casino giants on the sidelines, another big question is who in the industry will be willing to spend money to back the referendum.
“How much money are those guys willing to put in before they even know they’re getting a contract?” said a New York lobbyist involved with casino issues. “How much money would you pay to promote the referendum without any assurance that you’re even going to get one of those seven licenses? You could give some token money.”
Karl Sleight, who is the leader of the racing and gaming industry team at the law firm Harris Beach, noted that Maryland wrestled with a similar predicament. Opponents and supporters there spent $90 million collectively before casino gambling was legalized.
“And that’s the Maryland market,” Sleight said. “We’ve estimated that it would be more than $150 million if people get really active on this.”
The success of the referendum may hinge largely on turnout. Some observers have speculated that the governor’s decision to leave New York City out of the picture for now is a way to get back at Genting for the failure to reach a deal on a massive convention center at the company’s Resorts World casino in Queens. But others said the move was more strategic and designed to avoid making casinos an issue in the city, which makes up a big chunk of the statewide electorate, and where a mayoral race could boost turnout.
A group called New Yorkers for Local Approval of Casinos has launched a campaign calling for the siting process to allow local governments to vote on whether or not a casino should be located in their communities. The governor has said local officials should have input, but he has not specified what that means. The group was started with seed money from the Oneida Nation, which operates the Turning Stone Casino in upstate New York.
“So if the issue is having a casino in New York City or not right away, well, we have a mayoral election, and Nassau County is going to have a county executive election, and that’s the overwhelming majority of votes right there statewide,” said Michael Tobman, the advocacy director for the group. “So if a casino is off the table for that constituency, then we’re going to come back in five years when they want to put one in Coney Island or the Hudson Yards development or Belmont or out in Suffolk, and say, ‘I don’t know that we want this,’ and the developers are going to say, ‘You just voted in 2013 and you said yes.’ ”
Of course, plenty of the details of the proposal have yet to be worked out.
“I think after the budget, people will come around and begin to focus on this, and then all of these things will be made clear, and people will line up where their interests lie, either for or against the plan,” Featherstonhaugh said. “You have to give the governor a lot of credit for being politically astute enough in the way he’s put this out, so that it is still generic enough for him to ultimately lay out any plans that he wants. And in the interim, I can’t see anyone who can be opposed to his plan, other than the Native Americans, and I can’t really see anyone who would be in favor.”
Tags: Andrew Cuomo, Atlantic City, Barry Snyder, casino, constitutional amendment, Foxwoods, Genting, James Featherstonhaugh, Karl Sleight, Las Vegas Sands, MGM, michael tobman, Mohegan Sun, New York Gaming Association, New Yorkers for Local Approval of Casinos, Niagara Falls, Oneida Nation, Referendum, Revel, Seneca Nation, Turning Stone Casino