New York Casinos Generate $14 Million In Taxes, Paced To Meet Projections

[toc]The opening of the Tioga Downs Casino in December 2016 initiated regular weekly and financial reports issued by the New York State Gaming Commission.

With two other casinos now up and running, New York is seeing the gaming tax dollars flow.

By the end of February, New York had collected a total of $13,626,888 in gaming taxes. Broken down by casino the contributions are:

• Tioga Downs Casino—$5,485,842
• del Lago Resort & Casino— $4,301,229
• Rivers Casino & Resort— $3,839,817

The del Lago opened its doors in January and Rivers followed in February.

Full year figures will be boosted by a fourth casino in NY

Early revenue numbers aren’t much help in forecasting full-year figures, but it is already clear that the casinos are going to make a major contribution to New York’s budget.

Total tax paid for the three casinos in February alone came to a little over $10 million, suggesting that annual tax receipts for the existing casinos will be above $120 million.

A fourth casino will further boost revenues when the Montreign opens in Sullivan. The Montreign is owned by Empire Resorts, and is the final casino to have received a license from the Gaming Commission.

Each applicant was also required to pay a $50 million fee for the license, giving an immediate one off boost to state revenues.

The Gaming Commission is limited to issuing only four licenses by the 2013 Upstate New York Gaming Economic Development Act, so the Montreign will be the last casino to be authorized under the current law.

Forecasts against revenue realities

In its application to the Gaming Commission, each casino was required to forecast its revenue expectations and expected gaming tax payments.

• Montreign forecast “gaming revenues and gaming tax revenues in 2019 of $301.6 million and $103.4 million, respectively.”
• Tioga Downs estimated gross gaming revenues and gaming tax revenues in 2019 of $98 million and $31.2 million.
• Rivers projected tax revenues to the state “to be in the range of $69-86 million in year one and $81-100 million in year five.” Rivers did not estimate revenues, but from the tax estimates they can be deduced to be in the range of $230 million-$287 million for year one.
• Lago projected gross gaming revenues and gaming tax revenues in 2019 of $282 million and $80 million.

Forecast year one tax revenues from three casinos in operation add up to a minimum of $180.2 million—a monthly rate of $15 million.

The actual $10 million for February is well short, but the evidence so far suggests that the forecast figures are within reach.

Tioga Downs has filed three months of financial figures with tax payments of:

• December — $1,690,982
• January — $1,846,671
• February — $1,948,189

At that growth rate it will reach its forecast tax payment rate of $2.6 million per month by the end of the second quarter this year.

If the other casinos match this performance, then New York will receive the benefits it expected when Governor Andrew Cuomo signed the new law into effect.

State regulated online poker could provide another revenue source

2016 saw New York get serious about the possibility of legalizing online poker. A bill submitted by Senator John Bonacic passed a Senate vote by 53 votes to five.

Sadly, the issue did not meet with the same support in the Assembly, and didn’t receive a vote before the end of the legislative session.

In 2017, the possibility may become reality.

There are two bills on the table, one in the Assembly and one in the State Senate– Assemblyman Gary Pretlow’s A5250 and Sen. John Bonacic’s S3893.

Opinion remains divided about whether the Assembly can be persuaded to support Pretlow’s bill, but in a positive development, the Senate’s budget proposal for 2017/2018 includes contributions from taxes on regulated online poker.

A $10 million license fee puts much of the revenue into the front end, so politicians can see an early and immediate addition to tax revenues.

NY online poker revenues are forecast to be as high as $200 million per annum. At the Senate Committee on Racing, Gaming and Wagering hearing in September 2015, the base case scenario was presented:

“From a New York-only perspective, we expect the state’s Internet poker market to
generate revenue of $122m in its first full year of operations, rising to $164.1m in
its fourth full year of operations.”

At the currently proposed tax rate of 15 percent, that level of revenue would produce an extra $24.6 million in tax revenues at market maturity.