. . . or, don’t care about the facts or taxpayers
. . followup (January 27, 2021): The issue of reducing the gaming tax rate Rivers Casino must pay on slots revenue is back in the news and threatening Schenectady’s finances. See “Rivers Casino in Schenectady could benefit significantly from Cuomo proposals” Daily Gazette, John Cropley, Jan. 23, 2021). And see our posting, “why not give Rivers Casino a tax break?” (Jan. 27, 2021), along with a Jan. 30, 2021 Gazette Letter to the Editor by our proprietor.
The points made below are still very relevant.
. . prior update (June 19, 2019): They’re at it again; see “Not again, Mr. Steck!“
Rush Street Gaming’s billionaire CEO/Owner Neil Bluhm is back walking the halls of the New York State Legislature trying to get a tax break for their Rivers Casino at Mohawk Harbor. [See “Schenectady casino seeks lower tax rates: Tax credit floated as relief” (Albany Times Union, by David Lombardo, March 29, 2019); “Rivers Casino takes another crack at a tax cut: Schenectady facility says highest tax rate among New York casinos puts it at a disadvantage” (Schenectady Gazette, March 28, 2019)].
They are again whining about the unfairness of the gaming tax structure, and have bolstered their specious arguments with a flood of misleading statements about their new competitor, MGM Springfield. They are also acting as if an Advertising Allowance tax credit is not a tax break. [follow-up (April 14, 2019): According to the Sunday Gazette, Rivers Casino just had its best month ever, but continues its whining and seeking tax breaks.]
Below is the slightly edited text of an email that I sent to members of the media this afternoon (Friday, March 29), in the hope that the press will dilute Mr. Bluhm’s Casino Chicanery with facts, and that our Legislators will care about the facts. It has been supplemented with arguments against the Marketing Allowance.
. . Left: MGM Springfield Tax Revenue Report . .
Rush Street Gaming is again seeking tax cuts from Albany for its Schenectady Rivers Casino, using misleading information and half-truths, plus a boatful of whining.Here are the facts:When it applied for a casino license in July 2014, Rush Street Gaming knew:
- The gaming revenue tax on a Capital Region casino, as stated in the 2013 enabling legislation, would be 45% on Slots and 10% on all other gaming revenue, with lower rates on slots in other Regions (that had less population density, fewer economic resources, and more competitors, i.e., racinos, Indian and Canadian casinos).
- MGM Springfield had received its license in June 2013 and was planning to build a spectacular casino resort on a bend of the Connecticut River, in the historic and cultural center of Springfield.
- The gaming tax in Massachusetts would be 25% on all casino gaming revenue proceeds (slots and table games).
- There might be a second full casino in western Massachusetts (but that has not happened).Rivers says that this unfair rate differential has lowered its Slots income, however:
- In the six full months since MGM Springfield has been in operation (Sept. 2018 through February 2019), Slot GGR at Rivers Casino has increased 10.4% over the same months the prior year, from $46,090,049 to $50,902,095. Update: In both 2018 and 2019, the total increase at Rivers Casino in gaming revenue (slots/ETG, table games, and poker) over the prior year was in fact from Slots/ETG play. See Monthly ReportsRivers says its unfair tax burden makes it impossible to fairly compete with MGM Springfield, and they need a slots tax rate below 40%, but:
From Sep 2018 through Feb. 2019, Rivers paid approx. $24 million in Gaming Tax, that equals a blended 34% gaming tax on its Total GGR. See Rivers Casino Monthly Financial Reports. While, from Sept. 2018 through Feb. 2019, MGM Springfield paid approximately $33 million in Gaming Tax, 25% of Total GGR. See MassGaming Revenue Report on MGM Springfield. HOWEVER,
Rush Street is not mentioning that, under its Host Community Agreement with Springfield:
- MGM Resorts paid upfront and advance payments, totaling $15 million to the City of Springfield during the construction phase including pre-payment of taxes for general city purposes as well as:
- $2.5 million to purchase equipment and to provide training for police, firefighters and emergency medical services personnel.
- $1 million to redevelop Riverfront Park.
- Once opening for business, MGM Springfield must make more than $25 million in annual payments to the City. This includes $17.6 million in lieu of tax payments as well as, among other things:
- $2.5 million to fund operating and other costs for police, firefighters, emergency medical services and education.
- $2.5 million for a Community Development Fund to be administered by the city to support early childhood education, higher education, libraries, health initiatives, and the betterment of the city and its residents.
- And, another $50 million coming up: Just last week, MGM Springfield reported to the Mass. Gaming Commission that it intends to invest in the proposed $55 million redevelopment of the long-vacant Court Square hotel building in downtown Springfield as part of an obligation to build housing within one-half mile of its resort casino. See WAMC Report.
See the MassGaming 4-page Summary of Springfield HCA, for the amazing array of extra obligations MGM Springfield has undertaken while Rush Street just pays what it has to pay under the 2013 Legislation, refusing to enter a Host Community Agreement.It should be clear that the Massachusetts gaming tax structure intentionally took into account the obligation of any casino applicant to negotiate an HCA or Mitigation Agreement with the host municipality, with its consequent large financial obligations over and above the State gaming revenue tax..RIVERS CASINO never entered into an HCA with the City of Schenectady, as Mayor Gary McCarthy refused to negotiate for one, as did Metroplex Chair Ray Gillen. It paid no upfront money during construction, and no economic development funds for the community. (see our posting “answering Mayor McCarthy on HCAs“, June 28, 2015)
- NYS Assemblyman J. Gary Pretlow (Dem., Mt Vernon), the Chair of the Assembly Standing Committee on Racing and Wagering, has been insisting that Rivers Casino offered to pay an “exorbitant” amount over the mandated gambling revenue tax, and should now be given a break. However, Rivers pays exactly the amount called for in the 2013 Legislation, under which it would have to pay more if it had offered to do so as part of its Application. Instead, The Report and Findings of the New York Gaming Facility Location Board (Feb. 27, 2015, at 261) specifically states in the section captioned “Maximizing revenues received by the state and localities. (§ 1320(1)(b))”, that: “Rivers does not propose a supplemental tax payment or increased license fee.“
- Mr. Pretlow may be confusing Rush Street’s generous offering in its failed application for a gaming license at Beacon NY, with its parsimonious approach to Schenectady.
WHY DO PEOPLE TAKE BUSES TO MGM Springfield?
- MRM Resorts spent $960 million to build a spectacular, true destination casino, in a bustling, interesting neighborhood
- Rush Street, after bragging that it builds spectacular international destinations in its Applications, spent merely $320 million at Mohawk Harbor, and has produced, at best, a homely, mediocre regional casino, which targets and predominantly attracts local residents and perhaps those living within a 60-mile radius
- By failing to insist on a true destination casino, Schenectady’s Mayor, City Council majority and Planning Commission, and the County’s Metroplex and Legislature, condemned our City to a mediocre Casino that will be constantly failing to meet its bloated projections and wanting tax breaks. See, e.g., our posting “casino choices in Upstate New York: who will choose Schenectady?” (January 19, 2017)
Exactly a year ago, we were in the same situation, waiting to see if the rush to the Legislative Budget Deadline (April 1), would bring with it a budget that included casino tax breaks. See “bum’s rush needed” (March 28, 2018). We were pleased at the time that Gov. Andrew Cuomo did not favor casino tax breaks. Also, the Gazette Editorial Board wrote a piece entitled “Editorial: No state financial deals for casinos” In addition, on Sunday March 30, 2018, the Times Union editorial board weighed in with “Editorial: Say no to casino subsidies“, which included the nifty illustration by Jeff Boyer that is at the head of this paragraph.
Follow-up (January 17, 2020): The results at Rivers Casino for calendar year 2019 help demonstrate why the Capital Region casino has a higher Slots gaming tax rate (45%) than the commercial casinos in other regions (38%). See the Albany Times Union article “Rivers best-performing of NY’s original Vegas-style casinos: Schenectady venue up 11 percent compared with 2018″ (by Lauren Stanforth, Dec. 25, 2019), which reports that: “Rivers Casino and Resort continues to outperform among the state’s three original commercial gaming facilities — growing the most in percentage of overall revenue compared with last year.” And,
Tioga Downs owner Jeff Gural said he always assumed Rivers would be the most successful of the four facilities because it is the only one located near an urban center.
“You just have to look at the population and the type of people,” said Gural, a New York real estate magnate who also owns the Meadowlands Racetrack in New Jersey. “With sports betting trends, they’re probably getting a lot of college kids. … Del Lago is in the middle of nowhere; Monticello (Resorts World) is in the middle of nowhere. Without a question the best location in New York is Rivers.”
The article notes that, of course: “Despite the favorable revenue uptick, Rivers had lobbyists at the Capitol earlier this year trying to sway state legislators to provide tax or other relief in the face of what it describes as competition coming from MGM Springfield two hours to the east.” We have consistently pointed out that the higher rate was used in the Capital Region because of its higher population density and greater wealth. Casinos get most of their business from within a 30 to 40-mile radius. It is pretty clear that Rivers Casino does not “out-perform” the other commercial NYS casinos on the metric of “revenue per capita” within their respective core focus areas; it gets more gaming dollars because so many more people live in the Capital Region.
Marketing Allowance? For some reason, we are supposed to believe that a Marketing Allowance is not a tax break, although it would reduce River Casino’s gaming tax burden by 10% of the Casino’s marketing expenses. Last year, we noted on this topic that: “In the TU article “Casino seeks state help in marketing” (Sept. 29, 2018), Assemblyman Phil Steck is far from elegant defending Rivers Casino request for a 10% marketing allowance reduction in its gaming tax obligations to the State”:
“It’s not saying, ‘State, come in and give us money’; it’s saying, ‘We believe we need to expand the market for our product, we need an allowance for marketing,’ and I think that’s a reasonable position for a business to take,” said Steck, a Democratic lawmaker from Colonie, of the request by the Schenectady casino, which is located on the former Alco site on Erie Boulevard.
“What they’re saying is, ‘If we spend 10 cents on marketing instead of giving you 100 cents on that dollar, we’re going to give you 90 cents,’ and that makes a lot of sense because if the total amount of revenue expands as a result of their marketing effort, the state’s going to make more money anyway and so will the city,” Steck said.
Assemblyman Steck apparently still supports such a Marketing Allowance, if it brings in more revenue, but does not demonstrate how that would happen. As I noted last year in correspondence with Mr. Steck, Rivers Casino already does a lot of advertising and marketing (a rather basic expense for doing business in a capitalist market), and if doing more would increase its revenue in any way, it would be doing just that. Moreover:
- Much of Rivers’ marketing appears to be aimed at bringing in non-gambling customers to the Casino complex and Mohawk Harbor. That business (drinking, dining, conventions, fight shows, concerts) does not add to Rivers’ gaming tax obligations (45% on slots, 10% on table games and poker). Instead, it merely increases profits for the Casino and its business associates, and generates the much lower taxes based on food and similar sales taxes (often “cannibalizing” the business of other local businesses).
- Rivers Casino is already a major beneficiary of the County’s Tourism Bureau and Discovery Schenectady programs for gaming and convention programs.
- Mohawk Harbor was allowed to put a giant shopping-mall style 30′ high by 18′ wide pylon sign, that looms over Erie Blvd. at a location that normally would permit only a 7′ high sign under our Zoning Code. The Harbor said it needed a sign with lots of space for its commercial tenants to advertise (and the sign has always had far more planks spaces that advertising tenants)l In permitting the sign, after literal begging for the favor by Metroplex Chair Ray Gillen, the Board of Zoning Appeals reversed a decision it had made just weeks before. The pylon sign contains a large LCD screen that changes message every 8 seconds; safety-conscious cities and planners discourage such distractions so close to a busy intersection. Isn’t this quite enough favoritism at the expense of the public interest for Mohawk Harbor and its Casino tenant?
Phil Steck balked when I called him “the Assemblyman from Mohawk Harbor” last year. But, I cannot imagine the normally-thoughtful Mr. Steck offering even his current conditional support for the Marketing Allowance, were Mohawk Harbor not in his Assembly District.
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. . many locals believe this northeast Harbor Way entrance to Rivers Casino, with its utility bollards, parking garage, and Hotel, is the more attractive (and far less tacky) view of the Casino . .