ALBANY — The third of four casinos planned for upstate New York opened on Wednesday, bringing with it more than 1,000 jobs and pledging to revive the local economy.
The opening of the Rivers Casino in Schenectady also brought the state closer to the saturation of the upstate gaming market, raising questions about how they will all co-exist.
There are now 16 casinos or racetracks with video-lottery terminals in New York north of New York City. One more, the $1 billion Montreign casino in the Catskills, is set to open next year.
Ring in the New Year in the Capital Region: December 31, 2019. Making plans for New Year's Eve in Albany? The Capital City and surrounding region have many great options for ringing in 2020 in style! From dinners to dancing, find Albany's top New Year's festivities right here. Located off I-890, the newly opened DoubleTree Schenectady hotel is 20 miles from Albany, NY offering free WiFi, an indoor pool and onsite restaurant. Located off I-890, the newly opened DoubleTree Schenectady hotel is 20 miles from Albany, NY offering free WiFi, an indoor pool and onsite restaurant. Brand new hotel located in downtown.
The facilities said they all expect to succeed, but the battle for the gambling dollar between Syracuse and Rochester is increasingly fierce with the opening last week of the $425 million del Lago Casino in the Finger Lakes.
NY just had a record year for its lottery
NY casino fees go to local communities
Three upstate casinos get NY licenses
New Albany Casino And Hotel
Battling for dough
There are now six casinos or racinos — which are tracks with the slot-machine-like VLTs — between Batavia Downs in western New York and the Turning Stone Casino owned by the Oneidas in central New York.
'I think it’s individual with each of them,' said James Featherstonaugh, the president of the New York Gaming Association, a trade group for the state's racinos, and an owner of the Saratoga Casino Hotel.
'They are convenience casinos, if you will. So it is very much sensitive to the local market.'
Closest Casino To Albany Ny
Indeed, many of the casinos hope they can simply tap into the market in the 50-mile radius — each becoming the regional hub for gambling.
'The key is how many people live within 50 miles,' said Jeff Gural, the owner of Tioga Downs in the Southern Tier, which in December switched from a racino to a full casino with table games after getting a state license.
Tioga Downs, which has seen an uptick in revenue since the switch, plans to open a hotel in November to draw in new customers.
But Gural, who put about $150 million into Tioga Downs and also owns Vernon Downs, which has VLTs in central New York, said the casinos need to build cautiously.
'I think honestly Rivers will be the most successful casino of the four. I think it’s the right size. It’s got a great location,' Gural said. 'I think Tioga is maybe slightly overbuilt, but we should do OK. Lago and Montreign spent a lot of money, and they have to do a lot of business to justify the expense.'
Resort or neighborhood stop
Del Lago, owned by Rochester mall magnate Tom Wilmot, wants to become a tourist destination in the Finger Lakes, while Montreign in March 2018 hopes to lure people 90 miles away in New York City -- reviving the once popular tourism area of the Catskills.
In the Albany area, Rivers and Saratoga are aimig to attract gamblers during the area's busy summer months, aided by the Saratoga Race Track season in July and August.
New York leaders haven't raised much concern about the growing competition: They have argued the risk is on the private owners of the new casinos.
'They will all work,' Assembly Racing Committee chairman Gary Pretlow, D-Mount Vernon, said.
'The people who spent a lot of money putting these together know what they are doing.'
But they are also operating under the state rules and limits on where the casinos could be built.
In 2013, voters approved a change to the New York constitution that allowed for the construction of privately owned casinos.
Previously, the nine horse-racing tracks — under in a 2001 law — were able to have VLTs; there are also six Native American casinos, three owned by the Seneca in western New York; two run by the Oneidas in central New York and the Akwesasne Mohawk casino near the Canadian border in northern New York.
Upstate focus
To drive business to upstate, Gov. Andrew Cuomo and the Legislature passed a separate law to require the first four private casinos to be built upstate —and gave them exclusivity for the next five years.
In December 2014, three upstate casinos were picked: in Schenectady; Tyre, Seneca County; and in Thompson, Sullivan County.
Tioga Downs was added a year later as the fourth upstate casino after protests from Gural and Southern Tier leaders that they were left out.
But at Finger Lakes Race Track in Farmington, Ontario County, there's ongoing concern that del Lago will hurt the track — despite last year getting a lower tax rate to help it. The Finger Lakes track is less than 30 miles from del Lago.
'I do think that area of the state is a little bit saturated, and it’s going to hurt the racetrack at Finger Lakes,' Pretlow said. 'And the racing industry depends on Finger Lakes.'
Cuomo attended the opening last week of del Lago, and on Wednesday he was at Rivers, the $300 million facility on the banks of the Mohawk River.
He has boasted that the casinos are a sign that upstate, after decades of manufacturing declines, is on the upswing
'What was that negative energy and the negative synergy is now a positive energy and a positive synergy,' Cuomo said.
Aiding municipalities
The casino plans have drawn criticism: As states like New York add casinos, some point to the ongoing troubles in Atlantic City, which has closed several of them in recent years.
Three casinos are planned in neighboring Massachusetts, for example.
'In the end, they are not only a moral disaster, in that many times you have people using them who should not be using them, but then you have what just happened in Atlantic City,' state GOP chairman Ed Cox said.
A portion of the revenue from the new casinos — about $3.3 million a year — goes to problem gambling, while the state and municipalities get a piece of the profits.
When all four of the private casinos are operational, the state estimates $325 million in annual revenue: $65 million to localities and $260 million for public education.
Local governments have also benefited from the casinos' licensing fees. Between the fees and revenue from the Indian casinos, municipalities received $109 million last year, according to the state Gaming Commission.
Also, New York's gambling market hasn't shown signs of slowing.
The state's Lottery revenue reached a record $9.8 billion last year, with the racetracks seeing a 3 percent boost.
Now, the downstate facilities — including Empire City Casino in Yonkers — want the state to allow them to open as full-scale casinos. Empire City and Resorts World at Aqueduct are VLT parlors, but are by far the two largest in the state.
Empire City said it provided $3 billion to the state's education coffers over its 10 years of operations.
“We wish these new casinos that same success and are excited to develop a full-scale gaming property in Westchester as soon as possible,' Tim Rooney, Empire City's CEO, said in a statement.
'The economic prospects locally and regionally are endless.”
ALBANY - Three upstate casinos that opened a year ago fell about $230 million short of their initial projections, state records showed.
The Rivers Casino in Schenectady, del Lago in the Finger Lakes and Tioga Downs in the Southern Tier collectively brought in about $359 million during their first year of operation, about 39 percent less than they pitched to the state in 2014 when they were granted gambling licenses.
The shortfall was expected: It was apparent in the first few months after they opened that the casinos wouldn't meet what now appear to have been rosy projections to the state in order to win a highly competitive bidding war among 16 applicants for four upstate casino licenses.
The trend will likely continue this year, according to an analysis last month by the credit agency Standard & Poor's.
'New York gaming tax revenues will likely miss expectations, putting into question long-term revenue stability,' the report said.
More: Inside look: NY’s largest casino opens with hope to revive the Catskills
A huge indoor waterpark is coming to NY
Del Lago Casino: Credit agency warns of financial troubles
First-year results
The upstate casinos said they were pleased with their first year in operation.
Rivers and del Lago opened in February 2017, while Tioga Downs switched from a racetrack with video-lottery terminals to a full-scale casino in December 2016.
All three have added hotels since they opened and added more amenities, which should create additional business in the coming year, they said.
They said they've collectively created thousands of jobs and partnered with local businesses to develop a new synergy in their regions of the state.
Del Lago ended its first year at about $147 million in revenue. It had estimated to state regulators a first-year figure of about $263 million — or about 44 percent lower than projections, the largest discrepancy among the three upstate casinos.
Its best month was the first month it opened in February 2017. Its worst was last month.
'In our first year, we delivered what we promised to the people of New York. We created more than 1,400 new jobs. We're responsible for a huge increase in tourism in the region,' Jeff Babinski, del Lago's general manager, said in a statement.
Jeff Gural, the owner of Tioga Downs, said initial projections for the casino included having the hotel opened sooner. It opened in December, rather than in May.
Tioga Downs predicted as much as $103 million in gaming revenue in its first year, but it came in at about $74 million, so 28 percent lower than hoped.
'Our projections assumed the hotel. That would skew the numbers pretty dramatically,' Gural said last month.
Gural said he's hopeful for an improvement this year as the casino adds new attractions, including a new clubhouse at the nearby golf course.
For Rivers Casino, it brought in $139 million through January. It predicted $222 million, a 37 percent difference.
Rivers, though, said it was happy with its first year.
“We’re extremely proud of our team members for their terrific contributions in year one, and we’re continuing our focus on delivering great guest experiences for the Capital Region,' Justin Moore, Rivers' assistant general manager, said in a statement.
Tough market
State officials have stressed that the new casinos have been good for the upstate economy and have boosted the state's overall gaming revenue. Also, local governments get tax revenue from the facilities.
'With the opening of these three facilities, the state has captured hundreds of millions of dollars of new revenue for localities and education that previously went out of state,' said state Gaming Commission spokesman Brad Maione.
The state also said the casinos all came from private investments and have benefitted economically struggling parts of the state — one of the intents of the law to allow for private casinos in New York.
In a report last month, Moody's Investor Service said the new casinos had increased the state's gambling revenue by 30 percent.
But it also cautioned that the new facilities have cut into the business of neighboring gambling facilities, such as Finger Lakes Racetrack near Rochester and Saratoga Racetrack near Albany.
'This trend, where newcomers are stealing share from incumbents, is consistent with what has been occurring throughout U.S. gaming markets, particularly in the Northeastern portion of the U.S.,' Moody's said.
In a separate report last month, Moody's warned that del Lago was performing 'substantially slower than expected' and could face trouble paying off its debt.
The Northeastern gaming market is getting more crowded, too.
Resort World Catskills, the $1.2 billion resort in Sullivan County, opened Feb. 8 as the largest New York casino.
On March 1, the Oneida Indian Nation in central New York plans to open its third casino in the region, called Point Place.
S&P warned that casino expansions in the Northeast, which includes expansions in Massachusetts, Rhode Island and Pennsylvania, could prove unsustainable in the long term.
'In our opinion, commercial casino gaming expansion in the region may provide short-term economic and budgetary gains, but is unlikely to improve state credit quality and may prove a long-term credit risk for states in the region,' its report said.
But the upstate casinos said they are optimistic about their future.
'As we move into del Lago Resort & Casino's second year as a tourist destination and gateway to the glorious Finger Lakes region,' Babinski said, 'we are focused on creating the best gaming, entertainment and dining experience for our customers and continuing to both increase tourism for the region and help new and old businesses grow.'
JSpector@Gannett.com
Joseph Spector is chief of USA TODAY Network's Albany Bureau.