Friday, May 23, 2014

Catskills or Nearby Casinos Are On the Way, and Will Be Beneficial

What’s been happening with casinos here in the old Borscht Belt?

Following November voter approval of four new casinos in New York State, the process set by the government has been moving along, and its progress has been much in the news. 

On April 24th, all companies wanting to build and own a casino here had to submit official preliminary proposals, along with $1 million to cover the cost of the state’s research and investigation about them.  That call precipitated 22 for the three areas in which the four will be allowed – seven for around Albany and Saratoga, three in a mid-state L-shaped expanse, and the remaining 12 in or south of the Catskills. 

Although interest in the famous old Jewish resort area was the heaviest, five of the 12 proposals were not welcomed much by many of its residents.  They were planned for Orange County, and many living in Sullivan County, where Grossinger’s and other old resorts were located, think they would become an irresistibly more convenient choice for people coming from New York City.  The concern was stated well by Steven Plotkin in a letter in the Sullivan County Democrat, saying to Orange County residents that “we are economically depressed, you are not,” and that “we have been chasing this dream for 30 years.  How long have you been chasing it… two weeks?” 

Indeed, several Sullivan County casino efforts have failed over the past decades, and as of March, Orange County unemployment stood at 6.3%, compared with 8.4% for Sullivan.  New York Governor Andrew Cuomo has not officially said he wanted to avoid Orange, but has held that a main purpose of the casino initiative, which he supported, was to help relatively depressed areas.  The minimum amounts that companies would need to invest, revealed May 12th, were also set much higher, $350 million over the cost of land and other initial expenses, for Orange County, compared with $130 million for Sullivan.  That difference may prove to be irrelevant, however, as most of the proposals called for way over the higher amount in capital investment anyway.

There have been two other controversies.  One was put forth by Hasidic Jewish groups.  A number of rabbis met in March to start a campaign to stop casinos from being built in Sullivan County, naming the presence of Orthodox schools, camps, and yeshivas in the area.  Another has been about the amount of preferential tax treatment the resorts would receive.  Although it is common, as an incentive, for a new large hotel to be exempt from mortgage tax, from property tax for some number of years, and to receive a discount on sales taxes on its hotel and entertainment locations and business, it may not be legally possible for the same to be granted for gambling facilities or revenue. 

So what will happen next?  That is up to the 22 companies committed to the process.  By June 30th they are required to submit detailed proposals, which the state Gaming Facility Location Board will evaluate over the following few months.  The stated selection criteria call for 70% of their final decision to be based on “economic impact factors” such as the number of jobs created, revenue value to state and local governments, and the proposer’s experience and proven ability in building and running casino resorts, along with 20% based on “local impact factors” and 10% for “workforce enhancement factors,” including dealing with problem gamblers.  The casinos will be expected to be finished and in business within two years of acceptance.

So what can we expect?  Although most seem to agree that Sullivan County is a preferred location for one, and maybe two, of the four new casino resorts, the criteria above may force the selectors to choose one in Orange instead.  Locations in Newburgh and, especially, Tuxedo, both closer to the city and with easy access with the New York Thruway, could afford to be larger, and would therefore create more jobs and revenue, have more amenities, and recapture the most out-of-state gaming revenue, all parts of the 70% criteria section.  Those on the board may be nostalgic for the likes of a new Grossinger’s, with its stand-up comedy venues and tribute to the great performers who got their starts in Monticello and Liberty, but the rules they must work with may prevent such a location from ending up the closest one to New York City.  If the committee decides to grant licenses to one casino apiece in Sullivan and Orange, the Sullivan one will almost perforce be less successful and may need to be smaller.

Even with the possible problems, though, what I wrote before still stands.  The Catskills or Hudson Valley-area casino, or casinos, will create a lot of jobs, including hundreds if not thousands of temporary construction positions along with what could easily be more than 1,000 permanent local ones.  The new tax revenues, even if reduced, will be quite large, and will benefit local residents.  More people, not fewer, will participate in outdoor recreation and other tourist activities in the area.  And if Sullivan County gets at least one of the licenses, the Catskills will be prominent, for the first time in decades, on the vacation map. 


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