Analyst: New York is “the circus” of casino politics

October 31, 2023 11:35 AM
Photo: Shutterstock
  • David McKee, CDC Gaming Reports
October 31, 2023 11:35 AM

Late 2025 is the new timeline for awarding the coveted New York City casino licenses. That’s the conclusion of B Global founder Brendan Bussmann in a new Truist Securities political roundup. Bussmann explained that “one has to wonder how long the second phase of this initial stage will take, let alone the subsequent stages that arguably are more challenging and daunting over several multi-billion projects.”

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Bussmann noted a shift in the New York narrative, writing that MGM Empire City and Resorts World New York were no longer consensus picks to receive two of the three licenses. Their “favored-nation” status has eroded since the firing by Genting Group of Scott Sibella, also a former MGM Grand boss and currently under federal investigation.

The political pundit warned of “a drawing of straws between real estate moguls, a politically juiced process,” or even “an inflated race to the bottom as we have seen with sports betting’s tax rates.”

The front burner on Empire State gaming issues is currently occupied by the Seneca Nations latest proposed compact. Bussmann predicted talks would go “into extra innings,” because the Seneca feel they’re overtaxed, not unlike upstate casino operators, who have been trying to get the legislature to lower their levy for years.

The third ring of Bussmann’s circus is occupied by igaming, already being talked up for the next legislature. For the analyst, this would “at a minimum serve as a lifeline to the existing sports-betting operators should they be lucky enough to also offer this form of gaming.” However, he forecast a 51 percent tax rate, akin to that on online sports betting.

“While the circus will be in town for some time, the only things that are consistent is that it is New York’s money, not the people or operators’ money, that actually make things move in the Empire State,” Bussmann concluded. He added that the state needs money soon, so high taxes are expected.

Another Barnum & Bailey spectacle is, per Bussmann’s analogy, playing out in Florida. The U.S. Supreme Court having lifted its stay on Seminole Tribe sports betting, the question now becomes whether wagering will be enjoined by state-level courts. Litigation continues over the constitutionality of Gov. Ron DeSantis’s compact with the Seminoles, which is opposed by a coalition of small casinos and gambling detractors alike.

Supreme Court Justice Brett Kavanaugh raised, to no avail, concerns about the compact violating the Indian Gaming Regulatory Act. “Changes to IGRA have been contemplated, but only through the administrative rule making process, as there has been little desire or ability to move modernization through Congress,” Bussmann noted. Channeling Margo Channing from “All About Eve,” he forecast that Floridians “could be in for a long and bumpy ride.”

Bussmann had even less comfort for the Pala Band of Mission Indians and entrepreneur Kasey Thompson, who recently filed a pair of pro-sports betting initiatives in California. Conventional wisdom, he wrote, “says Pala is California Dreaming.” Why? Because it’s less than two years since voters overwhelmingly rejected tribal sports betting and “voter fatigue” may be an issue. He gave the initiatives “low odds of success.”

The mechanism devised by Thompson would deal in offshore sports-betting operators, effectively legitimizing them, under a tribal consortium. Requiring in-person registration, the wagering would be taxed at 25 percent, with 40 percent of that levy allocated toward mental-health programs and alleviating homelessness. The other 60 percent would go to revenue sharing among all 109 California tribes. Roulette and dice games would also be permitted at tribal casinos under the initiative’s language.

The tribal/private Pala partnership met with a frosty reception from the California Nations Indian Gaming Association. It responded, “Decisions driving the future of tribal governments should be made by tribal governments. While the sponsors of these initiatives may believe they know what is best for tribes, we encourage them to engage with Indian Country and ask, rather than dictate.”

Bussmann observed that Pala and Thompson have less than four months in which to collect 874,641 valid signatures. He added, “While California voters may have a limited memory, the 2022 ballot measure received fewer votes than qualified signatures.”

Speaking of ballot initiatives, Bussmann briefly turned to Missouri, where putting sports betting on the next election ballot is being talked up as an alternative to the stymied legislature. “While everyone would hope that a legislative solution was possible, it appears there is little appetite to waste time,” the pundit opined. “While some view ballot initiatives as wild cards, successfully run efforts and putting the power in the people may be the quickest way to end the logjam.”

As for elections, Virginia’s next month will see two Churchill Downs-related gambling issues on the ballot: a slot parlor in Manassas and a full-fledged casino in Richmond. Noting the failure of a Richmond push two years ago, Bussmann observed that this year has seen a big-spending campaign to reverse the odds: “This will be a close one in the end, with it coming down to turnout from both sides.”

That was a relative skirmish, he thought, compared to the battle over “skill-games,” slot-like devices, recently banned by Virginia courts. Bussmann forecast a legislative push to legalize the unregulated untaxed devices, though he didn’t predict the eventual outcome (“anyone’s guess”).

Legislative tinkering with gambling also dominated the waning days of the North Carolina Legislature, which rejiggered some elements of Tarheel State sports betting after it had been legal for a only few months. As for three other forms of gambling, none has the needed consensus to pass, Bussmann wrote. These include horse racing and casinos, the latter of which was stricken from the state budget after Gov. Roy Cooper took umbrage.

“While additional tax revenue is the goal to offset other taxes in the budget and shift the long term revenue away from a largely contingent income tax, it is yet to be determined what can pass through both Houses although leadership continues to push in very unique ways,” Bussmann wrote. The legislature is so closely divided, he resumed, that gaming bills are unlikely to pass, at least so long as conservatives hold out. As for reconfigured sports betting, it now seems likely to launch in June 2024, perhaps earlier.

Finally, Bussmann made a brief rhetorical stop in Kentucky, where sports wagering “is off to a fast start out of the gate”: $249 million in handle during the first month. “While this is the latest market to launch, most of the operators have a stake in the Bluegrass State that seems more open to business than its neighbors to the north,” penned the analyst, “that continue to criticize its construct, mostly because of the 18-years-and older provision.”