New York s Casino Law: What It Does and Its Impacts on Problem Gambling

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1 New York s Casino Law: What It Does and Its Impacts on Problem Gambling Bennett Liebman Government Lawyer in Residence Government Law Center Albany Law School Advisories Advisory 1: I Am a Lawyer "Lawyers are excused from the necessity of interesting their readers, and all too often-let's face the evidence-they take advantage of this enviable exemption. John Mason Brown, literary critic Advisory No. 2 Audience Participation I don't like audience participation. It falls somewhere between incest and folk dancing. Advisory No. 3 History The only way to understand a subject is to understand it historically. Samuel Butler Nathan Lane 1

2 Hudson Valley and Gambling Cradle of Harness Racing. Home of the sport s foundation sire in Rysdyk s Hambletonian in Goshen. Ran the Hambletonian trotting s equivalent to the Kentucky Derby - in Goshen at Good Time Park for 26 years. Pari-mutual harness racing in NY started in Goshen in Used to have 2 tracks in Goshen. Hudson Valley and Gambling Walkill Blue Chip Farms in Walkill the leading commercial horse boarding and breeding farm in North America. Winbak Farm in Walden top breeder. Probably no area has wanted casino gambling for a longer time than the Catskills. New casino opened up Resorts World Catskills in February. 2

3 NYS As Gambling Central 1850: 6,000 gambling houses in NYC: 1 for every 85 residents. Casinos and pool rooms flourished in Manhattan in the last half of the 19 th century. Numbers game: Between 800-1,000 policy shops in New York has led the nation in illegal gambling activity. Gambling Concerns involving Legalized Gambling Activities The gambling known as business looks with austere disfavor upon the business known as gambling. Ambrose Bierce The 1976 federal report Gambling in America concluded gambling is inevitable. Numerous Legal Activities Motivated by Same Impulse as Gambling. Create same problem gambling issues. Most importantly Stock Markets and Future Markets, Commodities Markets. What s the difference between day traders, hedge fund managers, arbitrageurs on the stock market and someone betting Internet poker? Now fantasy sports Classified as non-gambling and legalized by the State legislature. Same issues involving non-legalized wagering activities, Sports betting, numbers, Irish sweepstakes, card games. They have always been with us. Traditional Casino Gambling Casinos: Larger Gambling Venues Offering Slot Machines and an Assortment of Live Dealer/Table Games traditionally Blackjack, Craps, Roulette, Baccarat, and Keno. Before 1978: Confined to Nevada New Jersey adds casinos in Atlantic City s Start of Indian gaming and Riverboats. 13 states have commercial casinos by

4 Casino Gambling Explosion New York State in 2001 By 2002, gambling a $70 billion industry. $28 billion from casinos. All gambling in 1992 had been a $27 billion business. Indian Gaming 2016: 240 tribes with 490 gaming facilities in 28 states and $31.2 billion revenue. All casinos even with slow growth through recession = approx. $70 billion in revenue. Constitution Forbids Gambling with Exceptions. Horse Racing. Traditional Lottery. Bingo. Games of Chance. 2 Indian Casinos from which there is no state revenue. Casino gamblers are leaving state to bet elsewhere. NJ, Conn. Gov. Pataki Whatever our feelings about gambling, we can no longer deny that New York sends more gamblers to these resorts than any other state NY State Expands Gambling 2001 Adds Video Lotteries at Racinos. By ,500 VLT s at Racetracks. Educational Revenue from VLT s Was $830 million. 5 Indian Casinos. But still bettors leaving the state. No table games. No real slots % of Mohegan Sun customers from NY. From , approximately 25% of Atlantic City customers from NY. Casinos in New York You had a Constitution that theoretically prevented gambling but allowed lots of it. NY: Still Not Competitive With Other States: 2 nd Rate Gambling Operation. Areas Had Been Seeking Casinos Since Need for Upstate Jobs. 4

5 Entering 2013 First passage in 2012 of Constitutional Amendment authorizing up to 7 casinos. But we ve had numerous first passages of Constitutional casino amendments starting in They never achieve 2 nd passage. Governor s 2013 State of State and Budget Advocates Upstate Destination Resort Casinos a casino gaming plan to boost upstate development. Place plan in budget. Executive plan largely shut out in budget. We are back at square one. April - Early May 2013 Casino Developments Basically few. Newsday March 17, 2013 Back to the drawing board. Governor in late March says that the issue is for end of session but Important and difficult. Daily News May 2, 2013 Fold on casinos. May 9, 2013 Gov. announces casino proposal at press conference. 3 upstate NY casinos. Exclusivity zones for the tribal casinos in good standing. 3 zones if all tribes have exclusivity agreements. Up to 6 zones if tribal casinos not in good standing. 5 year head start for upstate over NYC. 5

6 Bill Readied June 2013 Other First Draft Provisions 207 page bill. 3 casinos in 4 potential areas. Deals in place with the Mohawk and the Oneida. 25% tax, $50 million licensing fee, Capex to be determined by site selection board. No Downstate Casinos 5 years. Separate gaming facility location board makes decision on award based 65% on economic development, 20% local, and 15% workforce issues. 10% of revenues to host municipality and host county. 10% counties in region. 80% for elementary and secondary education. Sports wagering in casinos if allowed federally. Casino specific crimes. Ban on cyber sweepstakes. Racing Support Payments. Funds for Problem Gambling. Gaming Inspector General. Ban on Political Contributions from Applicants and Licensees. Immediate Legislative Reaction We first show the draft to the legislature in the 1 st week of June. Basically silent. But one dominant issue. Don t want absolutely anything to do with casino selection. Revert to selection panel named by gaming commission. Also renamed the bill the UNYGEDA. Upstate New York Gaming Economic Development Act of Immediate Public Reaction Bill goes public on June 6. Nobody s happy. Major casino firms shut out of downstate. Senecas complain. Racinos withhold support objecting to casino tax rates, licensing fees, and other fees. 6

7 Bill Readied: Governor s Strategy No pre-determined winners: especially since he believes that the racinos received a gift when they received VLT s. Need to pass the bill through the legislature. Keep eyes on the prize: Try to craft a package which minimizes moneyed opposition to a casino. Senate and Assembly Strategy Who are their allies? Senate: Nassau County, Downstate OTB s, Seneca Nation, Satisfy Racinos. Assembly: One Main Priority: Keep Casinos Out of NYC. General Support of Casinos in Hudson Valley/Catskills. Issues Accepted Throughout Draft Overall Framework of Regulatory Licensing by Gaming Commission; 3 Regions. Problem Gaming programs. No smoking; 21 year minimum age, 24 hour operation, sports betting, Gaming Inspector General. Ban on Cyber-Cafes. Basic distribution of funds to localities and to education. Compromises Reached for Racinos Tax rate for slot machines matches VLT taxation. Gaming Commission determines licensing fee, capex requirements. No mandatory $1 million investigatory fee. No specific need for local referendum or county approval. 4 casinos in place of 3. 7 Year Moratorium and New Legislation Required for Downstate Casinos. But Yin and Yang: Threat of New VLT s if Referendum Fails. 7

8 Senate Adds 2 VLT Facilities for Nassau and Suffolk OTB. Potential for Additional VLT Facility in Nassau if Referendum Fails. No licensing of felons. No labor peace agreement for construction of facility. No prevailing wages for casino construction. Lower weight for workplace issues. 15% of consideration to 10%. Economic factors move to 70%. Limit consideration of issues such as MWBE, affirmative action and workforce mobility issues. Inclusion of interstate multi-jurisdictional account wagering services as source of revenue for in-state racing. Very Few Adds. Assembly Adds Most concern was on language of casino crime legislation. Ended up rewriting many of these provisions. Lobbying Interests Continually Visited by Lobbyists. Tribal Settlement Agreements with Seneca. Changes Cost of Living Contribution Providing More Support to Racing Purses. Non-Profit Entertainment Venues Made convincing case that they could be threatened by casinos. Made obtaining an agreement between applicant and entertainment venues a factor in awarding license. Executive concedes on tax rates, license fees, investigatory fees, number of casinos, prevailing wage, licensing, casino crimes, OTB VLT s, casino campaign contributions and workforce issues. Executive gets no predetermined winners, a bill through the legislature and few moneyed opponents. 8

9 You Get What You Need! Governor achieves the Reverse Goldilocks. The Unhappy Medium. Nobody happy, but nobody is unhappy enough to put up money to complain about it. Election November 2013 Casinos win by 57% to 43%.. 6/17/13 NY Times Myriad deep-pocketed state and national players would most likely be involved in any fall referendum battle. Proponents spend approximately $4.5 million opponents.5$. But casino referenda in other states immensely more expensive. $95 million spent in Md. 2012,$64 million in Ohio 2008, $24 million in NJ Three Casinos in Upstate Advanced by Casino Location Board. Schenectady, Sullivan and Seneca Counties in December of Fourth Casino Authorized for Tioga County in October of December 2016 Tioga Downs opens as casino. All now open Current Casino Status Tioga Downs in Southern Tier. Rivers in Schenectady. Del Lago in Seneca County in the Finger Lakes. Resorts World Catskills, a $900M project at the Concord site, opened in February. 9

10 Casino Status for NYC Area Three casino licenses remain available under Constitution. Under legislation, no casinos downstate until December 2023 otherwise damages to existing casinos. New legislation would be needed. But what if NJ puts casinos in metro NY? Will NY authorize downstate casinos? Probably yes, based on 2016 resolutions. State of New York Gambling 2016 = $6.328 Billion Gambling Revenue in NY. 4%1% 0% 15% 32% Revenue % 48% Traditional Lottery Video Gaming Indian Gaming Horse Racing Charitable Gaming Fantasy Sports Casinos Current Status of Casinos All Four open Revenue less than anticipated. Likely produced about 5% of NY gaming revenue in Likely about 8-9% in Not a game changer but what about sports gambling? Problem Gambling MASSIVE PROBLEM 1% Pathological; 4-5% problems Significant Comorbidity with Mental Illness Substance Abuse. May be Genetic Issues. Demands Treatment I've been gambling since I was eight and I've been hocking jewelry since I was 12. Now give me some chips. 10

11 Funding for Problem Gambling In NYS, always behind the curve. By 2013, $2.235 million for problem gambling. Actually down significantly in funding from the early years of the Great Recession. But somewhat stabilized. NY was 27 th in nation spending per capita on problem gambling. But among states with funded services, NY ranked 27 of 39. Dedicated Funding Stream for Problem Gambling $500 per annum fee for problem gambling for each slot machine or table game. Can be adjusted for inflation. Also revenue from winnings of gamblers who should have been excluded. If each casino averages 2,000 slot machines and tables, that means $4 million in additional funding. Problem gambling funding increases by 175%. Greater increases if there are downstate casinos. Money must go to problem gambling education and treatment purposes. Problem Gambling and the Casino Legislation Specific Legislative Finding The state and the casinos will develop programs and resources to combat compulsive and problem gambling. Siting criteria taking additional measures to address problem gambling including, but not limited to, training of gaming employees to identify patrons exhibiting problems with gambling. License criteria demonstrate to the commission how the applicant proposes to address problem gambling concerns. Forcing the Casinos to Address Problem Gambling Issues Mandatory problem gambling plan. Required Program Authorizing Patrons to Exclude Themselves. Employee training. Procedures to identify patrons and employees with suspected or known problem gambling behavior. Information on Treatment. Public Awareness Outreach Program for Problem Gambling Issues. 11

12 Advertising Restrictions Include Problem Gambling Hotline Number. Allows Patrons to Block Direct Solicitations for Advertising. Ban on Deceptive False or Misleading Advertisements Gaming Commission and Problem Gambling Established working group open to all on PG. Major Rules passed last June. Need for Commission- approved problem gambling plan before operation. Also annual and quarterly reports on PG. Employee training reinforced every 12 months. PG signage throughout casino and on all gaming devices. Gaming Commission Actions HOPELINE Signage conspicuously located throughout facility and on all gambling devices. Cash/credit limits and ATM machines must be located off the gaming floor. Regularly scheduled PG training for staff recognizing a problem gambler/how to engage. Conspicuous display of PG materials in brochure racks and on websites. Standardized advertising requirements. All gaming facilities using a single, statewide selfexclusion database. Partnership with OASAS and Council on Problem Gambling Conclusion on Problem Gambling It s a start. Definitely should be doing more. But at last, State is no longer giving lip service to problem gambling. Admit we have a problem. Get involved!! 12

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