Lobbying Firm Co-Founder Expecting ‘Frenzy’ For NY Downstate Casino Licenses

Written By Mike Mazzeo on April 12, 2022 - Last Updated on November 30, 2022
Downstate NY Casinos Expansion frenzy

New York City has the potential to be the epicenter of the gaming sphere.

That much can be ascertained given the massive launch of online sports betting in the state, as well as the acceleration of three downstate casino licenses — two of which Mayor Eric Adams is hoping to house in NYC.

“I think people are very much champing at the bit to get into business in and around New York City, because that probably will become the Gambling Mecca of the country, and maybe even the world,” said Stuart Shorenstein, co-founder of lobbying firm Cozen O’Connor.

“When you look at how well the video lottery terminals have been doing, putting a full casino in NYC with a hotel and other amenities, it could be spectacularly big.”

Downstate NY casino licenses will cause ‘frenzy’

Shorenstein expects most of the major casino corporations will express interest in the NYC market.

“I think it’s going to be a frenzy,” he said.

The licensing fee for the downstate casinos will be no less than $500 million, though it could wind up being higher. The perceived favorites are existing VLTs Resorts World NYC in Queens and MGM Empire City in Yonkers.

After Gov. Kathy Hochul signed the budget bill into law, the process of selecting a gaming facility location board can begin. The majority of its members must earn appointment within 180 days of the bill becoming law. The board will then issue a request for applications (RFA) within 90 days of members joining the board. Then, separate community advisor committees will form based on regional interest.

The community advisory committee must approve any interested entity, which would also need to pass through zoning regulations. At least some — if not a significant amount of — local objection is expected. An exact timetable from RFA to final selection is unclear at this point.

Licenses could become more expensive for outside corporations

Of course, with existing properties and community relationships, established management and a history of generating revenue for the state, Resorts World NYC and MGM Empire City won’t need to endure that type of ringer. If the state wants to realize at least $1.5 billion in licensing fees and add to its coffers quickly, both VLTs could have an edge.

Granted, with other aggressive major players like Las Vegas Sands, Hard Rock, Bally’s and Wynn in the mix, the NY casino licensing fees could end up being more expensive than expected.

“People will be looking at every angle to find some sort of advantage,” Shorenstein said.

Gov. Hochul administration more open to gaming expansion

Sen. Joe Addabbo has frequently mentioned how much easier it is working with the Hochul administration on the gaming front than disgraced former Gov. Andrew Cuomo.

Hochul’s re-election bid, though, took at least a bit of a hit when her No. 2, Lt. Gov. Brian Benjamin, was arrested Tuesday on bribery charges. Benjamin pleaded not guilty.

In a statement Tuesday, Hochul said she “accepted Brian Benjamin’s resignation effective immediately. While the legal process plays out, it is clear to both of us that he cannot continue to serve as Lieutenant Governor. New Yorkers deserve absolute confidence in their government, and I will continue working every day to deliver for them.”

Hochul could potentially endure it, though it could weaken her position. And rumblings of Cuomo making a last-minute run himself continue.

How NY gambling future looks: Hochul vs. Cuomo

It was Cuomo who had resisted legal NY online sports betting for a long time, and pushed for the controversial 51% tax rate.

Early on, the 51% tax rate has been a massive boon to the state’s coffers for educational funding. Of the $168.1 million in tax revenue generated Jan. 8 through April 3, 98% goes to education. However, it’s unclear how it will play in the later months as promotional spend decreases and the sports calendar becomes less saturated with games.

Online sportsbooks in New York have already been openly complaining about long-term profitability and sustainability. But the state’s position has remained: You knew what you signed up for when we awarded you the license.

A bill to increase the number of operators — resulting in a tax rate decrease based on the matrix instituted by the New York State Gaming Commission — failed to gain traction in the budget for the 2023 fiscal year. And Cuomo would presumably oppose lowering the 51% tax rate if he got back into the governor’s office — however a massive longshot it currently appears.

Photo by AP / John Locher
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Mike Mazzeo

Mike Mazzeo is a contributing writer for PlayNY, reporting on legal sports betting in New York while covering the potential legalization of NY online casinos and poker. He previously wrote for ESPN, the New York Daily News and The Ringer, among others.

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