Casino ante: $182M
Location Board sets minimum investment figure
CAPITAL REGION Prospective casino operators will need to spend at least $182.25 million to get a casino license in the Capital Region, the state Gaming Commission announced Monday.
The commission’s Gaming Facility Location Board will require prospective operators to invest $135 million into building the gambling area, at least one hotel and other amenities contributing to a destination resort. In addition, operators will be expected to spend $47.25 million on elements of their proposals not included as part of the minimum investment figure, including the licensing fee, any money spent on land acquisition or financing costs and certain startup expenses.
“We assume market forces will ultimately guide minimum capital investments,” said Paul Francis, a board member who led the board’s succinct meeting Monday morning.
At least a half-dozen sites in the Capital Region are being eyed for casinos. As of now, the operators of the Saratoga Casino and Raceway in Saratoga Springs and Clairvest, a Toronto-based private equity management firm, are the only prospective applicants that have tied their proposals to specific sites in the Capital Region.
The racino operators plan to build a $300 million casino in East Greenbush on a swath of land near Exit 9 off Interstate 90. Clairvest executives have indicated they are committed to a location on the Amsterdam-Florida border near Thruway Exit 27.
Other prospective sites include planned development controlled by the owners of Howe Caverns in Cobleskill, the former American Locomotive property owned by the Galesi Group in Schenectady, a project known as de Laet’s Landing in Rensselaer and a location near Exit 23 of the Thruway. The owners of Howe Caverns, Clairvest and the racino operators are among the 22 entities that paid the requisite $1 million fee for background investigations; the operators of the racino paid the fee twice because they intend to propose a casino in the Orange County town of Newburgh.
Many site owners and casino operators indicated they would wait for the minimum capital investment figure to be announced before pairing up. Yet after Monday’s determination, few were talking.
A spokesman for the Albany site dubbed “E23” said his group is still reviewing the documents and declined to comment, while a spokesman for the Howe Caverns site did not return a call for comment. An executive marketing the Schenectady site said he had no new information to disclose.
Rita Cox, a spokeswoman for the racino operators, said they are pleased with the figure. She praised the board for doing “a very thorough job” evaluating all the criteria for the figure.
“They’re very fair [figures] and we’re looking forward to submitting the winning application,” she said.
The Capital Region is the only one of three designated areas that has a set investment amount for all included counties, according to the scale adopted by the facility location board. The Southern Tier and Catskills-Hudson Valley regions have varying figures that depend largely on the county in which the casino is sited and whether another proposal is selected for that area.
The total investment in five counties in the Southern Tier is $114.75 million, while prospective operators in Wayne County or Seneca County would have to pay $182.25 million. But if a license is awarded to Wayne or Seneca counties, then prospective operators in the remaining portion of the region will be required to invest only $94.5 million.
In the Catskills-Hudson Valley region, operators hoping to land a casino in either Orange County or Dutchess County — both located in relatively close proximity to the lucrative New York City market — will have to invest no less than $472.5 million. If neither county gets a license, operators targeting the five remaining counties will be required to invest at least $175.5 million; that figure drops to $138.5 million for a second license if Orange County or Dutchess County is awarded a casino.
The inflated figure for Orange County means the racino operators could end up needing to spend upward of $654.75 million if they are successful with both of their applications. The racino is also in the process of undertaking an estimated $30 million expansion of its Saratoga Springs facility, but Cox said the operators have every intention of submitting two license applications.
“We’re moving forward with both projects,” she said.
To reach the total investment figure, the board reviewed data on recently constructed and proposed gaming facilities in Massachusetts, Maryland and Ohio, as well as developments at various Native American casinos. The data included the nearby adult population, estimated total investment and required minimum investment in such gaming facilities.
The board also reviewed economic and financial models prepared by its consultants that were developed based on estimated gross gaming revenues for likely gaming facility locations and accepted industry operating margins, and debt-to-equity ratios. The board surmised a wide range of comparable markets exists for both total investment and required minimum investment in gaming facilities.
Monday's announcement could weed out some of the entities that paid the commission’s $1 million background check fee but no longer intend to submit an application. After five business days, the state police are expected begin conducting background checks of the prospective operators. Entities that paid the fee will be afforded a full refund until that time.
Casino license applications are due June 30. The board is expected to review them until the fall, at which time they could select up to four proposals to be dispersed through the three regions.
“This is still very much in the preliminary stage,” Francis said during the board’s meeting.