NY’s Poor Casino Results Could Impact iGambling Push

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Wednesday, November 15th, 2017 | Written by Shane Larson

While it’s hard to predict what will happen when gambling, predicting the revenue land-based and internet casinos will generate from their operations is an equally challenging task. This has now become apparent in New York, which legalized land-based casinos in 2013, estimating at the time that these gambling establishments would bring in $588 million each year. The reality, however, is that they are now on track to bring in much less. Around $220 million less, in fact.

Background

A few years back, state voters ratified a constitutional amendment to allow for up to 7 Vegas-style resorts to be built in the state, which at the time was already friendly to gambling through lotteries, horse racing, and tribal casinos. There are now three brick-and-mortar casinos operating in New York; the Del Lago, Rivers Casino and Resort, and Tioga Downs. In the meantime, the Resorts World Catskills is set to open early in 2018, with all of these casinos offering poker, table games, and slot machines legally.

Reactions to the Revenue

The New York Gaming Commission says that the financial numbers are not complete yet, and that it’s too soon to make an informed judgement. Highlighting some of the factors at play during the casinos first year of operation, the Commission pointed towards the gambling floors opening before the rest of the resort facilities were up and running, including restaurants and hotels. There are also many other variables to consider when it comes to opening gambling establishments as part of resorts, all of which can skew the initial revenue results of these venues.

Putting a positive spin on things, general manager and executive vice president of De Lago, Jeff Babinski, said that the revenue produced so far has already helped the local community, including its farmers, business owners, local governments, employment, and education establishments. Babinski further stated that he was confident that his casino was “moving in the right direction”, even if revenue has fallen a little short of expectations.

However, New York Assemblyman J. Gary Pretlow (photo) has expressed his concerns that the casinos may soon request that the state bail them out. Consequently, he is now requesting that an investigation be conducted as to why the revenue generated so far has come in so far below initial expectations. Pretlow has even asked the state comptroller Thomas DiNapoli to launch investigations into whether the casinos had deliberately inflated their estimates in order to originally get their licenses.

Is it too Soon to Panic?

Many people in the casino industry feel that it’s too soon to start panicking or launching investigations. The casinos haven’t reported their full-year revenue yet, and some parts of the properties haven’t even been opened for long enough to impact overall revenue, much less the revenue tracked for a significant period of time.

Casinos also understand the process of attracting customers by using long-term extensive marketing and advertising. These new casinos are competing with tribal gambling establishments that have been around for much longer, not to mention the casinos in neighboring states. While the estimates should have been made with consideration of these factors, it is difficult to accurately predict an outcome which has many unpredictable factors, including management, construction, and customers.

Potential Impact on Future Online Gambling Bills

While most feel that the current situation likely won’t impact the potential for online gambling legislation passing in 2018, there are, however, two key elements that could influence the debate.

The first is that Pretlow has been sponsoring online gambling bills for years now. While Senator John Bonaric has managed to drum up support for his bills in the Senate over the past two years, Pretlow has been less successful. He always introduces online gambling legislation, claims to champion the cause, and then loses faith in online gambling during the year. This is no doubt why he has yet to get the right support needed for the bills to advance.

If the latest casino revenue figures have Pretlow panicking even though the full year hasn’t been calculated, then this is likely going to affect how willing he is to continue pushing for legalized online gambling in 2018. He will therefore continue having his doubts about online gambling projections going forwards, even if the comptroller’s office agrees to investigate land-based casinos.

Any delays in casino delivering solid profits and meeting the expectations placed on them is also likely to leave people feeling that it’s too soon to go ahead and legalize online gaming. Some legislators may want to allow the casinos more time to deliver stronger numbers and prove that they can deliver on the promised tax revenue before allowing them to play with an entirely new industry all together in online gaming.

While New York could be motivated to act on the legalization of online gambling following its passing in Pennsylvania, the process could still be hampered by the disappointing numbers coming out of New York. The Big Apple will no doubt be the place to watch in 2018 when the issue of online gaming legislation comes onto the agenda once more.