Winners and losers in upstate New York casino decision

By David Klepper, Associated Press, Posted: 12/20/14

ALBANY >> The new casinos coming to upstate New York won’t open for at least a few years, but there are already winners and losers as the state expands into Las Vegas-style gambling.

While officials and developers in Schenectady, Sullivan and Seneca counties are celebrating the promise of jobs, tourism and tax revenue, supporters of the 13 losing bids are mourning lost opportunities.

Among the losing bids was one made locally by the former Nevele Hotel in Wawarsing.

Following months of deliberations, the state’s Gaming Facility Location Review Board announced Wednesday that it had picked the Montreign Resort Casino in the Catskills town of Thompson, in Sullivan County; the Rivers Casino & Resort at Mohawk Harbor in Schenectady; and Lago Resort & Casino in the Finger Lakes town of Tyre in Seneca County.

The facilities are projected to support more than 3,200 full-time jobs and generate $265 million in taxes, along with $136 million in licensing fees.

Gov. Andrew Cuomo said that for the three host communities, the casinos offer the possibility of greater tourism and a chance to revitalize long-struggling upstate areas.

“This is really about jobs, and resorts to spur tourism,” he said. “We wanted the best plan we could get. … This is all private-sector activity, creating thousands of jobs in upstate New York, which hasn’t happened in decades.”

— The $630 million Montreign Resort Casino project includes an 18-story casino and hotel complex, meeting spaces and an indoor waterpark. Its developer, Empire Resorts, operates through a subsidiary of the nearby Monticello Casino & Raceway.

— The Rivers Casino & Resort at Mohawk Harbor is part of a larger redevelopment effort at a formerly blighted riverfront site. The $300 million project calls for a hotel, a high-end steakhouse, 66 gambling tables and more than 1,100 slot machines.

— Lago Resort & Casino, a $425 million project, will include a spa, a 207-room hotel, restaurants, 2,000 slot machines and 85 gambling tables.

Board members said they took into consideration the region’s increasingly saturated gambling market and chose not to award a fourth license to avoid taking too much business away from existing gambling operations. Developers said they’re keenly aware of the size of the market, and the need to size their projects correctly.

“You have study the market very carefully, and you don’t want to overbuild,” said Greg Carlin, CEO of Chicago-based Rush Street Gaming, the company working with the Albany-based Galesi Group on the Schenectady project.

Likewise, the board didn’t pick the bidders who projected the largest tax revenue for the state. Instead, board chairman Kevin Law said the board was swayed by the winning projects’ financing plans, and their ability to deliver for the local community’s economy.

The Nevele, once a popular destination in the Catskills’ fabled Borscht Belt, closed in 2009 after years of struggling financially. It was bought out of bankruptcy by developer Michael Treanor, who formed Nevele Investors LLC with the sole purpose of bringing a casino to the site. Support for a casino and resort was strong throughout Ulster County, but it was not enough to overcome the winning Sullivan County bid.

With its closeness to New York City, Orange County attracted the grandest proposals and six bidders, the most of any county. Yet the board opted not to award a single license in the county. Law said that was because an Orange County casino would have taken too much revenue from existing gambling operations closer to the city — and because many of the contenders faced financial uncertainties and environmental challenges.

Two casino proposals in the struggling area were snubbed in favor of the Finger Lakes project. The decision came at an especially sensitive time for the Southern Tier: On the same day as the casino decision, the Cuomo’s administration announced that it would ban hydraulic fracturing for natural gas, seen by some as another economic lifeline for the region.

“Take a ride around the Southern Tier and see what it looks like. It’s about as depressed an area as there is and when you had a chance to help these people, with the fracking and the casino, they give them this doubleheader,” said Jeff Gural, owner of Tioga Downs racino, which had bid for a casino license.

The state’s racetrack casinos will face new competition from the three casinos — but it could have been a lot worse. The board held off on awarding a fourth license, and said protecting the racinos and slot parlors was one reason they didn’t award a license in Orange County.

Gural, who also operates the Vernon Downs racino, said the Lago resort could put him out of business. James Featherstonhaugh, one of Albany’s best-connected lobbyists and a partner at the Saratoga Casino and Raceway, said the competition may force his facility to consider “significant downsizing.”

Wednesday’s decision was a triumph for critics of a casino planned for East Greenbush, near Albany. The board’s agreement to award only three licenses pleased those who said the state couldn’t support four. But for gambling opponents there was little to celebrate.

“The whole concept of economic development through commercial casinos is wrongheaded,” said Stephen Shafer, of the Coalition Against Gambling in New York. “It actually leads to less money, not more, because of the costs of problem gambling.”