New New York Casinos Come Up Short, Commission Says They Need More Time

When New York approved plans for three new land-based casinos, optimism had, in some quarters at least, become infectious. These three brand spanking new facilities would modernise the face of gambling within the city, and present new options for local gamblers and visitors alike. Particularly in the face of the ongoing confusing picture around online gambling laws, the casinos were set to capitalise on a hungry, and growing market.

Fast forward to this week, and their first sets of results look a little…off. At least, that is, when you compare them to the state’s expectations as far as gambling revenues were concerned.

Between them, these three new casinos sent a smidgen over 50.0 million to the state’s pockets in the last year, and New York officials are keeping suspiciously quiet about their revenue projections for the year ahead.

So could this underperformance be a reflection on these casinos particularly, or a natural upshot of broader market problems for the land-based casino sector?

The New York State Gaming Commission has it’s own ideas, and they tend to fall on the more generous side of the fence. Pointing to large-scale job creation in New York, and the over-budget development costs that have ploughed back into the local economy, the Commission’s line remains: give them more time.

As Robert Williams, the Commission’s executive director pointed out, ‘the full amenities are not yet open.’ This goes some way to explain the underperformance, but critics of the plans will perhaps not be so easily pacified.

Jeff Gural, of Tioga Downs Casino, lobbied the state attentively for the construction of his new casino, projecting 32.0 million in state revenues from the project. Now that the resort has opened, the reality is closer to 13.0 million.

By his own admission, the market conditions have so far proved challenging. “I think the market is saturated and we’ve got a lot of work to do to get the revenues where they need to be.”

Results from the others are similarly anemic. Rivers Casino has so far managed just 56.0 million, and And del Lago has clocked just over 63.0 million, a full 40% shy of its expected year-one revenues.

There is no doubt the market remains challenging for land-based casinos in the US, and that’s a picture that is being reflected elsewhere.

Unfortunately for casino resorts, the days of their monopoly on gambling have ground to a halt, with online and mobile casinos now accounting for an ever-growing share of the market.

While there will always be a place for physical casino resorts, particularly amongst tourists and those looking for experiences, the convenience, flexibility and product offering from their online counterparts is still winning, hands down – in spite of the legislative position in the US.

The most effective way for state-level finances to leverage the gambling sector would be a liberalisation of the current laws. Increased licensing for online casino operators and sports books across individual states would be a start, bringing to an end the mess of laws that current serve only to confuse and frustrate the market.

By coming into line with pretty much the rest of the Western world in embracing the online gambling sector, states like New York could be able to raise the revenue they need, without supporting the speculative gambles of developing new, big money resorts.

A balance between supporting offline and online operators would arguably be the best approach, and New York state and others like it could soon patch up the holes in their coffers, while tidying up what remains a somewhat anomalous area of the law.

New York relaxed its state constitution in 2013 to allow the development of new casino resorts, with the revenues to be split 80/20 between education and property tax (80%), and contributions to neighbouring counties (10%).

It may well be the case that New York’s new casinos will come into their own over time, and their respective operators are working tirelessly to make that success a reality. In the meantime, their weak performance means less money than envisaged supporting these vital local functions – money that could soon be replaced by a more sensible approach to welcoming online operators.