The Albany Times Union reported this afternoon that: “The Upstate Theater Coalition for a Fairgame” said Tuesday that it has reached agreements with 10 of the 17 casino applicants seeking casino licenses in the three upstate regions eligible for commercial gambling halls.” (“Entertainment coalition nets majority of casino bidders“, Capitol Confidential Blog, by James M. Odato, July 1, 2014). The three Capital Region applicants that have partnered with “FairGame” are Schenectady’s Rush Street Gaming, the Hard Rock Café in Rensselaer, and the Howe Caverns Casino.
According to TU’s Capitol Confidential, Philip Morris, CEO of Proctors and chairman of Fairgame, said:
“While we were not able to come to accord with a number of other applicants, the agreements we have reached are significant. They clearly declare the size and scope of casino entertainment plans; they have joint booking agreements that will guarantee access for the casinos and for Fairgame members to touring performers; they support the Fairgame Fund for those same facilities; and they establish arts granting programs for smaller organizations in every region. Finally, should the plans the casinos propose be significantly changed, each applicant has agreed to mitigate those impacts with additional support.”
By also reaching agreement with seven applicants in the two other Upstate regions that are eligible for casino licenses, the “FairGame” Coalition (a/k/a The Concert Cartel) may end up achieving joint booking and venue-size limitations, and a revenue-sharing agreement with each of the 3 or 4 winning casinos. That could mean the equivalent of territorial exclusivity, and joint booking and ticket pricing, for all/each of FairGame members, across all of the eastern portion of Upstate New York, through midState locations such as Utica and Syracuse, and apparently stretching to their members in the Western end of the State.
Will the members of the FairGame Coalition be allowed to try to leverage the protection that the State meant to give local and regional entertainment venues from local casinos into a vast network of competition-killing promises among themselves and between each entertainment center and far-spread casinos covering several large regions, and perhaps all of Upstate New York?
My “State Action” Analysis: To survive antitrust scrutiny, the FairGame group would need to justify such clearly anticompetitive joint action with a “state action” defense: the claim that their action is immunized from the antitrust laws because of the actions and policy of the State where the conduct takes place. However, just last year, in its FTC v. Phoebe Putney Health Sys. Inc. (No. 11-1160, 2013) opinion, the U.S. Supreme Court reiterated that state-action immunity is a disfavored exception that will get careful examination before being accepted. The Phoebe Putney Court further stressed that to successfully invoke state-action immunity, state laws should be explicit in their intent to displace competition. In addition, although the issue was not reached in Phoebe Putnam, prior cases have required that the state must “actively supervise” the conduct that would otherwise be deemed anticompetitive where — as here — the actors are private parties rather than governmental entities.
The FairGame Coalition may be able to show that New York State wanted to limit the competition that entertainment venues would normally face from a nearby casino, when it passed The Upstate New York Gaming Economic Development Act of 2013. But they cannot show that the State wanted to greatly reduce competition among the major art and entertainment centers themselves, or even between the arts venues and casinos that would not normally be considered part of their local entertainment market. The Act merely requires that the Siting Board evaluate whether the applicant has established:
“a fair and reasonable partnership with live entertainment venues that may be impacted by a gaming facility under which the gaming facility actively supports the mission and the operation of the impacted entertainment venues.” [§1320(3)(2)(D)]
As of COB today, I have not received any sort of reply from the State Attorney General’s office on the antitrust Complaint that I submitted last Friday. See our June 28th posting “arts venues want more than a fair game“.
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follow-up (March 8, 2017): An article in today’s Schenectady Daily Gazette, “Rivers Casino, Proctors team up for entertainment: ‘In no way, shape or form do I feel like we’re competitors” (by Brett Samuels, A1, March 8, 2017), suggests that my fears expressed above and in a prior post were warranted. See “a wicked concert cartel?” (March 8, 2017).