Caesars Vies With Genting in Bidding for New York Casinos

Jun 30, 2014 7:19 pm ET

(Updates bidders beginning in second paragraph.)

June 30 (Bloomberg) -- The fight for four New York state casino licenses is set to intensify as operators including Caesars Entertainment Corp. and Genting Bhd. jockey for access to the 8.3 million residents of the biggest U.S. city.

The New York Gaming Commission received 17 applications today, the deadline for bids. The list of possible locations has been whittled down from 22 in April. Among those who dropped out, Foxwoods Resort Casino of Connecticut.

The biggest prize among three regions approved for casinos is the Catskill Mountains-Orange County area, parts of which are 50 miles (80 kilometers) from New York City. That area attracted eight bids, according to the list released today. The commission must balance the goal of economic growth in the Catskills, a once-booming resort destination, against the potential for more tax revenue in Orange County.

“This is turning out to be who can generate the most revenue for the state,” said Charlie Barbuti, the supervisor for Liberty, a Catskills town where Foxwoods had planned its casino. The company said in a letter to the local newspaper that it was unable to secure financing because of the prospect of competition in Orange County.

“We can’t generate the same revenue as those closer to a city of 8 million people,” Barbuti said.

Voter Approval

New York became the largest U.S. state to allow non-tribal Las Vegas-style casinos when voters approved a constitutional amendment in November. The state expects to raise an additional $430 million from gambling annually once the four casinos open in the next two years, according to a May 30 report by Comptroller Thomas DiNapoli. The cash would be split among the host municipalities and schools across the state.

The Empire State is entering the casino industry at a time of increasing market saturation in the Northeast. In Atlantic City, New Jersey, the casino cash haul has fallen about 44 percent since 2006 as gambling options expanded in Maryland and Pennsylvania.

Revel AC Inc.’s casino in Atlantic City has filed for bankruptcy twice since opening in 2012, and is now seeking a buyer at auction. Caesars said last week it would close its Showboat property there on Aug. 31 amid falling revenue and increased competition.

“The proliferation of gaming facilities in neighboring states in recent years may reduce New York’s ability to attract out-of-state gamblers,” DiNapoli said.

Picking Winners

The gaming commission said it will pick winners before year-end. Economic development and potential tax revenue will make up 70 percent of the judging criteria, DiNapoli said.

Orange County, with its potential to generate more revenue because of its proximity to the metropolitan area, won’t carry an advantage over the Catskills, according to Robert Williams, acting executive director of the commission.

The intent of the law “is to provide maximum benefit to the state through bringing economic benefit to municipalities that have been economically disadvantaged,” Williams wrote in a June 16 letter to John Bonacic, the Republican who heads the senate’s gambling committee.

Bonacic, who represents areas in the Catskills and Orange County, said by e-mail that Foxwoods’ dropping out of the race already shows the potential impact of casinos in Orange County.

“However, I do believe that proposals in the Catskills will be strong contenders for the licenses, as they most fit the spirit of the legislation,” Bonacic said.

The original casino measure Bonacic pushed didn’t include Orange County, he said. It was added when Governor Andrew Cuomo sent the final version to lawmakers after negotiations with legislative leaders, the lawmaker said.

Test Preparation

“When I looked at that, I said, ‘Wow, if I were a public casino company, I’d certainly look in Orange County if they allow you to bid,” said Jeff Gural, chief executive officer of American Racing & Entertainment LLC. The company is looking to add a full-scale casino to its Tioga Downs racetrack in Nichols, in the Southern Tier along the Pennsylvania border, one of the three regions. The Southern Tier attracted three bids, according to the list released today. The third area surrounds Albany, the capital, where five candidates applied.

Rich Azzopardi, a Cuomo spokesman, didn’t respond to a request for comment.

Empire Resorts Inc., which wants to build a $750 million casino near the Monticello racetrack in the Catskills, where it already operates a video slot machine parlor, isn’t worried, said Charles Degliomini, a spokesman.

“We feel like we’re the students who are overly prepared for the tests,” he said. “We believe in this process, and we trust there’s going to be a fair outcome.”

Tuxedo Junction

Monticello is in Sullivan County, where unemployment averaged 8.7 percent in 2013. That compares with 7.2 percent in Orange County and 7.7 percent statewide, according to the state Labor Department.

Genting, the Malaysian gambling giant that already runs a video-slot parlor in the New York City borough of Queens, wants to build a resort-casino in Tuxedo, in Orange County, that would incorporate a Renaissance fairgrounds and a ski mountain, according to plans filed with the town. Tuxedo is about 45 miles northwest of Manhattan. The company also applied for a license in Montgomery, further north, according to Lee Park, a spokesman for the commission.

Hard Rock

Hard Rock International submitted a proposal for a “Hard Rock on the Hudson” in Rensselaer, in the Capital region, according to a press release from the company. Penn National Gaming Inc. and the Cordish Cos. offered plans for an $750 million casino in Orange County’s South Blooming Grove, that includes a $1.5 million annual contribution to a business incubator.

Caesars aims to build an $880 million casino in Woodbury, 55 miles north of Manhattan and near Woodbury Common Premium Outlets, a shopping mall. The resort, which could open two years after receiving permits and approvals, would feature a World Series of Poker-branded card room and restaurants by Gordon Ramsay and Nobu Matsuhisa.

The company is collecting data to underscore Orange County’s economic hardships, said Jan Jones Blackhurst, head of government relations for the Las Vegas-based operator.

“Our position is you can have one in Orange County and one in the Catskills, depending on how you design them,” she said. “New York would be leaving too much on the table to exclude Orange County.”