Cuomo Does Not Plan to Let any Grass Grow under His Feet

It is budget time in New York and gaming is in the budget.  Governor Andrew Cuomo’s budget proposal anticipates casinos opening by January of 2015.  There is no time to waste, the state needs the tax money those casinos will generate as soon as possible.  Cuomo is not planning on any long delays, stumbles or bloody battles at the ballot box or in the competitive trenches that has marked the process in Massachusetts.

Gov. Andrew Cuomo’s budget proposal says new casinos could be operating in upstate New York by next Jan. 15. New York voters in November passed a state constitutional amendment to allow Las Vegas-style casinos beyond Indian land. State officials can now award up to four casino licenses upstate. Cuomo intends to appoint a sitting board this month and casino applications will be accepted in March. Cuomo has said construction can begin after the early fall announcements.  Associated Press, 1-21-14

Cuomo is anxious for the process to begin.  Casino applications will be accepted in March and Cuomo expects decisions on licenses by fall with shovels in the dirt immediately afterward.  In Massachusetts a year was hardly enough for Massachusetts Gaming Commission Chairman Stephen Crosby to hold a commission meeting; his commission needed time to think about its role and construct the regulatory framework.  It was a slow process and every time prospective licensees thought they knew the rules and conditions, Crosby held a press conference and changed the rules. Governor Cuomo wants nothing like that in New York.

Casino revenue is not the only gaming to make it into his budget. Cuomo also wants more money from racing.  He would like the racing industry to pay its share of gaming regulation.  Regulation is going to be expensive; the New York Gaming Commission has already a lot to do.  It regulates the lottery, Indian casinos, racinos and soon the casinos.  I wonder if the commissioners are asking for a raise?

New York Gov. Andrew Cuomo is proposing a $2 million tax hike on tracks, off-track betting, and simulcasting operations as a way to increase funding to the state agency that regulates the industry. Cuomo, in his 2014 budget plan unveiled Jan. 21, called for raising the current surcharge on handle from .5% to .6% to “ensure that regulation of this industry becomes self-supporting.”  …The agency regulates everything from the horse racing industry and lotteries to Indian casinos and charitable gambling operations. Tom Precious, Blood-Horse News, 1-21-14

Gaming is already big business in New York.  In 2013 the lottery generated $7.1 billion, the racinos $1.9 billion and the Indian casinos another billion, $10 billion in all. The governor is hoping to add another one or two billion dollars to the total.  New York won’t catch Macau, but if Cuomo has his way New York is going be in the upper echelon of gaming states.

The state’s nine racinos generated a total of $1.9 billion in 2013, an increase from $1.8 billion the year before and $1.2 billion in 2011. Resorts World Casino in Queens, with approximately 5,000 slot machines…jumped from $672.5 million in 2012 to $785.1 million this past year. Jon Harris, Elmira Star Gazette, 1-21-14

The New York State Gaming Commission has recruited Camelot to carry out market research on potential new lottery games because of worries about losing gambling revenue market share to casinos. New York state’s education system takes a proportion of revenues from lottery games. In 2012-13, this amounted to $2.2bn of the $7.1bn achieved in lottery sales, the highest produced in the US.  Gardner Gurney of the gaming commission said: “In order to safeguard state aid to education it is highly critical that we look at alternative approaches for the future of the lottery.”  Roger Blitz, Financial Times, 1-21-14

But, before the first the first casino can open there is much to be done; new regulations will have to be promulgated, applications reviewed, licensees investigated, licenses issued, operational plans reviewed and approved, slot machines tested and approved and employees certified to work in the casinos.  Then the work begins for the casino operators.   After the licensing, the casinos have to secure financing, draw plans, secure permits and build buildings.  A year is a very short time to accomplish all of that, but Andrew Cuomo is in a hurry.

However, we should caution old “No Grass under My Feet Cuomo” – there will be some pain to go along with the gain.  The lottery, racinos and Indian casinos are going to feel the pressure of the new casinos.  The lottery is taking steps to protect its revenues, the racinos – at least those that fail to get a casino license – and the Indian casinos will be forced to do the same.

Gaming has expanded dramatically in the region; since 2000, gaming in New York has grown fivefold – and so has the gaming in the surrounding states, with more to come when the casinos in Massachusetts open.   New York is going to become a battleground like Ohio.  The lottery, racinos, Indian casinos and the new casinos are going to be fighting each other over every gaming dollar.  By 2015, or if you don’t believe that is a reasonable time frame by 2016, there are going to be too many gaming options.  It will be Ohio and that is challenging at best.  But Cuomo won’t feel the pain and he won’t have any grass growing under his feet either.



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